Key Recommendations. Executive Summary. Government Performance Project florida h grading the states 2008

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1 For almost a decade, the Pew Center on the States, Governing Magazine and a group of academic experts have collaborated on this project to assess the quality of management in state government. Charting the Course for Excellence in Government Performance Florida B- Amid growing concerns among Americans about job stability, health care and education, there is a new demand for government to work better and cost less. Innovative solutions, particularly at the state level, are driving reform and progress. Florida often manages aggressively outsourcing administrative functions to achieve savings, launching large information technology projects and founding ambitious investment and insurance plans. But without firm oversight, these approaches sometimes run into trouble. Florida s managerial challenges are headed by human resources. Insufficient training and rapidly rising turnover of state employees underscore the need for a state workforce plan, which a committee is considering. Better statewide planning and a more consistent application of performance measures and program review recommendations could make better use of limited funds. Executive Summary Florida has many sound tools for government management from agency long-term plans and performance measures to numerous councils to review and improve government programs. Unfortunately, these mechanisms don t always provide information on the progress the state is making toward achieving outcomes. For instance, warnings from an internal audit of state investments were not heeded until after a freeze on one of the investment pools. Florida has managed most of its debt and long-term liabilities well. Following a rocky series of ambitious projects and outsourcing contracts, Florida instituted a Council on Efficient Government to review future deals. Unfortunately, the council arrived too late to assess the implementation of a new financial computing system, which was canceled in 2007 due to poor project oversight. The existing system is decades old and does not provide optimal reporting capabilities. Taking Action Key Recommendations The s team of management analysts offers the following suggestions. State policy makers and business leaders may wish to consider: People Requiring workforce planning at the agency level and implementing a statewide strategic workforce plan Increasing the investment in training for state employees Examining the causes of the increasing voluntary turnover rate Information Integrating the performance measures collected by agencies and audited by the Office of Program Policy Analysis and Government Accountability into the executive budget process Focusing on information technology (IT) planning, particularly regarding IT security; deficiencies in the voter-registration system should be the first priority Developing a statewide strategic plan as outlined in the 1972 legislation that mandated development and update of such a plan Money Improving internal controls, especially for programs that receive federal funding Assessing the viability of the Hurricane Catastrophe Fund Increasing opportunities for citizen engagement in the budget process and the availability of budget information to stakeholders The Division of Human Resources has contracted many of its administrative functions to a private company, and approximately 20 percent of the workforce now is employed on an at-will basis. Voluntary turnover has risen, and the state has begun to rely h 1

2 heavily on temporary workers. There is no statewide workforce plan. Agencies have strategic plans containing performance measures, but these are not consistently used to create budgets and manage state programs. Florida currently is improving its information technology (IT) planning, having recently created an agency to develop a strategic IT plan and oversee executive branch IT services. Florida manages buildings and transportation infrastructure well, using timely performance data for project management and maintenance. Each agency includes capital plans in its five-year strategic plan. However, the state lacks a single comprehensive plan for buildings. Taking Action Key Recommendations (continued) Infrastructure Compiling a statewide multiyear capital plan Developing specific criteria to prioritize capital project selection Funding bridges at a level consistent with the life-cycle cost principles applied to roads and buildings It is noteworthy that Florida may now be even more vulnerable to the effects of devastating hurricanes because it has become the insurer of last resort, and premiums collected may be inadequate to pay policyholders claims. The Pew Center on the States The Pew Charitable Trusts applies the power of knowledge to solve today s most challenging problems. Pew s Center on the States identifies and advances effective policy approaches to critical issues facing states. The mission of the, an initiative of the Pew Center on the States, is to improve service to the public by strengthening government policy and performance. The Project evaluates how well states manage employees, budgets and finance, information and infrastructure. A focus on these critical areas helps ensure that states policy decisions and practices actually deliver their intended outcomes. h 2

3 PEOPLE C- Strategic Workforce Planning Florida does not have a strategic workforce plan, though a steering committee is developing one. The current lack of a plan presents an especially challenging situation for the state, since Florida has made two significant changes in human resources (HR) management outsourcing some administrative activities and making approximately 20 percent of the workforce at-will employees. The state s voluntary turnover rate has risen, leading to a greater reliance on less experienced temporary workers. The Division of Human Resources produces a detailed workforce report annually. The report includes information about employee demographics, turnover, collective bargaining, compensation, training and equal employment opportunity reports. Hiring An increasing percentage of new hires fail to complete their probationary period, suggesting the state faces challenges in recruiting high-quality candidates. Florida has developed several agency-level programs to improve recruitment and retention. An audit indicates that the state has begun relying heavily on temporary workers to fill hiring gaps. Performance Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance weakness mid-level strength taking action Suggestions that state policy makers and business leaders may wish to consider: Requiring workforce planning at the agency level and implementing a statewide strategic workforce plan Increasing the investment in training for state employees Examining the causes of the increasing voluntary turnover rate Retaining Employees Voluntary turnover for classified employees is well above the national average and has increased significantly in the last few years. Total compensation for state employees is just below the national average, and employees pay a higher-than-average percentage of their health insurance premiums. Some agencies, including the Department of Corrections, have implemented limited retention bonuses. Training and Development Florida spends well below the national average on employee training as a percentage of payroll, and the recent trend is downward. The state s online human resource application allows for tracking employee training, however, and some courses are available online. There is no evidence of a formal knowledge management strategy or system. h 3

4 Managing Employee Performance Annual performance appraisals are required for Florida state employees, but the state has had difficulty implementing a statewide performance appraisal system as part of its administrative outsourcing. Certain agency evaluations, such as those for Child Protective Service investigators, include competencies and link to benchmarked pay increases. There is very little evidence, however, of the use of performance-based compensation. PEOPLE Perspectives on this area of state performance: People form the living core of any organization. To assess state performance in the People category, the team examined how well a state manages its employees. Among many other factors, the team reviewed how states hire, retain, develop and reward high-performing employees. Given the challenges of an aging workforce, new expectations of younger workers and competition for top performers with the private and nonprofit sectors, the ways in which a state conducts business in this crucial area are vital to its ability to serve the public. Grades in the People category ranged from A in Virginia to D in New Hampshire and Rhode Island. The national average among the 50 states for the People category was C+, and ten states received that grade. Twentythree states earned grades above the national average (grades of B- and above), and 17 states received grades below the national average (C and below). A number of promising new practices in recruitment strategies and leadership development emerged from this year s study. The Project will provide additional detail on these practices in the coming months. h 4

5 INFORMATION B- Strategic Direction Florida has no statewide strategic plan. Agencies have longrange program plans that include performance measures, though these are produced pro forma in some instances, repeating the same performance targets each year rather than setting goals for progress. Some agencies also have strategic plans that provide more useful guidance that may help in attaining program goals. In 2007, Florida created the Enterprise Information Technology Services agency, which has been asked to develop a statewide strategic technology plan, though none currently exists. Budgeting for Performance State agencies routinely produce significant amounts of performance information as part of the state s legislatively mandated Long Range Planning Process. These measures typically include output, outcome and efficiency measures. However, neither agency budget requests nor the governor s budget includes performance information, and performance outcomes do not consistently guide state spending. Managing for Performance Agencies track performance information, though the quality of information tracked varies by agency. The state s recently implemented procurement system has aided the ability of agencies to receive best value in purchases and contracts. Many contracts contain specific performance targets linked to agency strategic goals. Performance Strategic Direction Budgeting for Performance Managing for Performance Performance Auditing and Evaluation Online Services and Information weakness mid-level strength taking action Suggestions that state policy makers and business leaders may wish to consider: Integrating the performance measures collected by agencies and audited by the Office of Program Policy Analysis and Government Accountability into the executive budget process Focusing on information technology (IT) planning, particularly regarding IT security; deficiencies in the voter-registration system should be the first priority Developing a statewide strategic plan as outlined in the 1972 legislation that mandated development and update of such a plan Performance Auditing and Evaluation Florida s Office of Program Policy Analysis and Government Accountability (OPPAGA) continues to be a leader in performance auditing. OPPAGA does a large number of high-quality performance audits that explore not only the results of agency activities but also factors outside the agencies control that affect performance levels. For example, in an audit of state programs to divert nursing home admissions, the state looked at the amount of time these programs could prevent patients from entering nursing homes while determining whether patient health and family status affected success rates. h 5

6 Perhaps one reason the agency has been so successful with performance auditing is that OPPAGA also is responsible for approving agency performance measures that are reported with each budget request. While the Auditor General does not have the responsibility to conduct performance audits, the office sometimes does so. Although fewer in number, these reports tend to focus on major state initiatives, such as implementation of the Help America Vote Act and the state s electronic procurement system. Online Services and Information The state s Web site is an overall area of strength. Among the common transactions citizens may complete are renewing vehicle registrations, replacing driver s licenses, filing taxes, applying for unemployment and Medicaid benefits and reserving campsites. Performance information is available for schools, as are higher education graduation rates. Myflorida.com includes a section focusing on cyber protection resources and reporting. information Perspectives on this area of state performance: Advances in information technology offer the promise of propelling every organization toward greater efficiency and accomplishment. Growing demands for public-sector transparency and for 24/7 public access to services are spurring a new level of creativity in meeting citizens needs and improving internal business processes. To evaluate performance in the Information category, the examined how well state officials deploy technology and the information it produces to measure the effectiveness and results of state programs, make budget and other management decisions and communicate with one another and the public. Grades in the Information category ranged from A in five states (Michigan, Missouri, Utah, Virginia and Washington) to D+ in New Hampshire and South Dakota. The national average among the 50 states for the Information category was B-, and 13 states received that grade. Fifteen states earned grades above the national average (grades of B and above), and 22 states received grades below the national average (C+ and below). The study uncovered a number of promising new practices that are engaging the public, streamlining business processes, and improving the quality and utility of the information upon which state leaders rely to make policy and program decisions. The Project will provide additional detail on these practices in the coming months. h 6

7 MONEY C- B- Long-Term Outlook For the most part, Florida takes a sound long-term approach to its finances. The state s pensions are fully funded, and other post-employment benefits obligations are minimal. Florida has a reasonable debt level, holding less tax-supported debt per capita than the average state. In 2006, the state adopted legislation that requires officials to prepare a long-term financial outlook. Florida s potential liability in the event of a disastrous hurricane remains an area of great financial risk; the Hurricane Catastrophe Fund created to reimburse insurance companies for a portion of catastrophic hurricane losses means that the state conceivably could have to issue billions of dollars in bonds, backed by property tax assessments, if a large hurricane hit the state. Budget Process Though Florida agencies produce a good deal of performance information, there is no results-oriented link in the budget between program outcome goals and allocations by the legislature and governor. Nor does the budget process provide ample information to citizens or avenues for public input. Performance Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting weakness mid-level strength taking action Suggestions that state policy makers and business leaders may wish to consider: Improving internal controls, especially for programs that receive federal funding Assessing the viability of the Hurricane Catastrophe Fund Increasing opportunities for citizen engagement in the budget process and the availability of budget information to stakeholders Structural Balance Florida has been particularly hard hit by the collapse of the housing bubble, with an expected $2 billion shortfall in the state s $71.5 billion budget. The state has no income tax and is highly dependent on sales tax revenues, which accounted for more than half of revenues in The state s ample rainy-day fund, which currently stands at approximately $1.3 billion, should help it weather the downturn. To underscore the need for ongoing structural balance, Florida also has capped the amount of nonrecurring general revenue that may be used to fund ongoing expenditures. Contracting/Purchasing Florida has long faced challenges stemming from the state s aggressive approach to outsourcing and contracting. To address this issue, the state created the Council on Efficient Government to review agency outsourcing. An electronic procurement system also has improved state and agency purchasing, as has the state s purchasing card system. However, the state could improve the link between the purchasing system and the state s financial system. h 7

8 Financial Controls/Reporting Florida s Comprehensive Annual Financial Reports received qualified opinions in 2004, 2005 and Florida s 2006 single audit indicated that a far higher-than-average amount of total federal awards dollars had compliance notations. In 2007, the state cancelled an upgrade of its financial system after investing nearly $90 million in the project, which had suffered from poor oversight. An internal audit that raised concerns about State Board of Administration investments was not fully addressed until after a freeze on the local investment pool managed by the board a full eight months after the internal audit was produced. MONEY Perspectives on this area of state performance: Having adequate financial resources and managing them well allows states to turn policies into results that matter for people. A state s fiscal systems are especially important in navigating today s uncertain economic climate. To gauge how well a state is functioning in the Money category, the Government Performance Project evaluated the degree to which a state takes a long-term perspective on fiscal matters, the timeliness and transparency of the budget process, the balance between revenues and expenditures, and the effectiveness of a state s contracting, purchasing, financial controls and reporting mechanisms. Grades in the Money category ranged from A in Utah to D+ in California and Rhode Island. The national average among the 50 states for the Money category was B-, and ten states received that grade. Twenty states earned grades above the national average (grades of B and above), and 20 states received grades below the national average (C+ and below). Transparent financial transactions and unfettered public access to fiscal information have become two of the leading indicators of a state that is functioning well in this area. Several promising new practices in real-time tracking of statewide expenditures and budgeting decisions, as well as joint executive and legislative revenue forecasting approaches, are highlighted in this year s study. The Project will provide additional detail on these practices in the coming months. h8

9 INFRASTRUCTURE A- Capital Planning Florida has no comprehensive capital plan. State agencies develop capital plans based on program needs and regular statewide condition assessments of buildings. The governor and legislature select projects prioritized in agency plans, though there are no specific statewide criteria to help agencies set priorities. Transportation planning and spending decisions are based on an asset-management process incorporating five variables, including pavement condition, congestion and economic development. Project Monitoring Florida s facilities accountability communication tool contains real-time information on the status of construction and maintenance projects, allowing project managers to communicate as needed regarding project issues. The Department of Transportation is at a five-year high for percentage of transportation assets built within 10 percent of their original budgets. Thanks to close project monitoring, the agency has been able to identify for review the 11 projects that prevented an even better performance. Performance Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination weakness mid-level strength taking action Suggestions that state policy makers and business leaders may wish to consider: Compiling a statewide multiyear capital plan Developing specific criteria to prioritize capital project selection Funding bridges at a level consistent with the life-cycle cost principles applied to roads and buildings Maintenance Both buildings and transportation assets are managed according to a life-cycle approach. The state budget allocates to the Division of Real Estate Development and Management a fixed amount per square foot for maintenance of the buildings it manages. The agency is given flexibility to spend that money on the most important maintenance needs. The Department of Transportation has been able to meet its condition goals for pavement and bridges. Internal Coordination The Office of Policy and Budget develops the capital budget based on governor s priorities. The Division of Real Estate Development and Management is responsible for project oversight of all state building projects. h 9

10 Intergovernmental Coordination Florida s Department of Transportation works closely with local governments to develop, design and construct transportation facilities and reimburse them for transportation expenses. The state concurrency policy, which requires local governments to provide public facilities needed to support development concurrent with the impacts of such projects, guides land use and growth by local governments. infrastructure Perspectives on this area of state performance: A state s capital assets are the literal crossroads of the effects of the other three categories People, Information and Money. Incidents such as the Minneapolis bridge collapse and the levee failures in New Orleans after Hurricane Katrina prove that few functions of state government in partnership with the federal government and other jurisdictions have a greater impact on people s daily lives than maintaining and securing the state s infrastructure. To assess how well a state is managing its roads, bridges and buildings, the Government Performance Project team factored the degree to which a state has transparent and effective capital planning and project monitoring processes, maintains its assets and coordinates this work within the state and with other jurisdictions. Grades in the Infrastructure category ranged from A in Utah to D+ in Massachusetts and New Hampshire. The national average among the 50 states for the Infrastructure category was B-, and ten states received that grade. Seventeen states earned grades above the national average (grades of B and above), and 23 states received grades below the national average (C+ and below). In assessing how states select, prioritize, monitor and maintain their infrastructure projects over the long term, the Project found a variety of laudable practices. The Project will provide additional detail on these practices in the coming months. h10

11 State Utah Virginia Washington Delaware Georgia Michigan Missouri Texas Indiana Iowa Louisiana Maryland Nebraska Arizona Connecticut Florida Idaho Kansas Kentucky Minnesota New Mexico New York North Carolina North Dakota Ohion Pennsylvania South Carolina Tennessee Vermont Wisconsin Wyoming Alabama Colorado Hawaii Mississippi Montana Nevada Oklahoma Oregon South Dakota West Virginia Alaska Arkansas California Illinois Maine Massachusetts New Jersey Rhode Island New Hampshire OVERALL PERFORMANCE GradeS D+ C- C C+ B+ D D+ C- C C+ B- B B+ A- A NATIONAL AVERAGE B- B- B National Average A- The Pew Center on the States Government Performance Project The Pew Charitable Trusts applies the power of knowledge to solve today s most challenging problems. Pew s Center on the States identifies and advances effective policy approaches to critical issues facing states. The mission of the Government Performance Project, an initiative of the Pew Center on the States, is to improve service to the public by strengthening government policy and performance. The Project evaluates how well states manage employees, budgets and finance, information and infrastructure. A focus on these critical areas helps ensure that states policy decisions and practices actually deliver their intended outcomes. The Project grades but does not rank states. All states within a given grade category receive the same grade and are listed alphabetically. h11

12 Glossary Following are some of the factors the Project team considered in evaluating state performance. For a list of the detailed criteria, visit Asset Condition Index (ACI): A standard means of determining an asset s current and future physical condition. ACI is calculated by dividing the dollar amount needed for annual repairs by the amount that would be needed to replace the asset. There are three levels of condition: Good (0 to 5 percent), Fair (5 to 10 percent), and Poor (greater than 10 percent). Benchmarks: Baselines against which the performance of government programs may be measured. The three most common types of benchmarks are past performance levels of the program, performance levels of similar programs in other states or agencies, and performance targets established by law or policy. Other possible types of benchmarks include targets set by federal regulations and standards prescribed by professional organizations. Bidder preference: Advantage given to vendors meeting specific criteria in the bidding process for state product or service contracts. Broadbanding: A technique that consolidates the number of salary grades into fewer but broader pay ranges. The spread of the pay ranges is wider, and there is less overlap among various pay ranges. Capital budget: The spending plan for the year for building or acquiring major infrastructure projects, balanced against revenues or other financial resources. Although states often approve separate capital and operating budgets, capital projects also may be funded in the operating budget. For each item in the capital budget, costs may include those for the structure or land as well as related costs for original furniture and equipment. Capital plan or capital improvement plan: A financial plan for the improvement of state-owned infrastructure assets over several years, including such proposed projects as buildings, roads, bridges, parks, dams and land. Capital planning process: A formal assessment of a state s future infrastructure needs. The review may consider demographics, service demand, public input, federal regulations, health and safety concerns, resource availability and other factors. Competency management system: A process by which an organization develops and manages specific models that include skills and behaviors needed for specific employee positions. These models may then be used in recruitment and hiring, performance appraisal criteria, and training and development. Contracting: The process by which the state obtains necessary services from nongovernmental vendors. (Note: We consider contracting for services different from procurement of goods or products.) Consensus forecasting: A process through which a panel of experts creates a forecast by mutual agreement. For a state s revenue forecast, included experts may include officials from the executive branch and legislature, as well as outside academic researchers, private consultants or citizens. Earmarked revenue: A source of revenue designated by law or state constitution to support a specific program or agency. By definition, earmarked revenue cannot include taxes imposed on specific goods, services or businesses; taxes on sale of fuels other than motor fuels; or refunds of fuel taxes. E-procurement: A system utilizing Internet technology to streamline the purchases of goods and products to reduce costs. Human capital plan: A plan for employing, developing and evaluating the workforce of an organization to achieve the organization s strategic goals and objectives. The plan typically is broader than a strategic plan or workforce plan, though it contains elements of both. Information technology (IT) plan: A statewide plan to improve the state s information technology systems that assesses future needs to achieve the state s overall goals and objectives. Knowledge management system/strategy: The process of gathering, organizing, sharing and using the knowledge and experiences of employees within an organization to improve performance. Knowledge management includes a wide range of personal and technological approaches to sharing knowledge. Leadership development program: A training and education program to prepare participants for leadership or senior management positions within the state or agency. h12

13 Glossary (continued) Life-cycle approach: An approach to infrastructure maintenance that aims to keep capital assets in good working order for at least as long as they were originally designed to last. Maintenance deferral: The act of postponing necessary operating and maintenance spending on an infrastructure asset. Operating budget: The annual spending plan for the state s recurring expenses, including salaries, equipment and repairs (as distinct from expenses to build or acquire permanent infrastructure). Performance: The accomplishments of an agency, program or employee relative to stated goals and objectives. Performance appraisal: An evaluation of how well an employee performs his or her job in relation to a set of predetermined standards. Performance-based compensation: A type of employee compensation based on demonstrated accomplishments on the job. Performance audits: Audits that focus primarily on the effectiveness of an agency or program in meeting its objectives (rather than on legal or financial compliance issues). Performance management system: A comprehensive process used to measure, improve and reward the performance of agencies, programs or employees. Performance measures: Indicators of progress toward meeting prescribed objectives. Common measures for evaluating performance include outputs, outcomes and efficiency. Rainy-day fund: A type of contingency fund in which money is set aside to be drawn upon in case of a future budget deficit. It often is referred to as a budget-stabilization fund. Salary compression: Inequity in employee pay occurring when the range of pay between the highest and lowest paid employees is unfairly small relative to their range of skills and experience. Strategic plan: A comprehensive plan for accomplishment in relation to stated goals and objectives. Ideally, the plan should cover multiple years, include targets for expected accomplishments and propose specific performance measures to evaluate progress toward those targets. Structural balance: A condition in which ongoing revenues meet ongoing expenses in a given fiscal year (excluding onetime expenses or revenues). Succession planning: A process of systematically and deliberately preparing for future changes of leadership in key positions. The process may identify potential replacements and provide strategies for developing and/or hiring individuals to meet future needs. Tax expenditure budget: A report showing the estimated reduction in state revenues attributable to tax credits, deductions and exclusions included in the state tax code. Workforce plan: A plan assessing the current and future capacity of a state government or agency workforce, including actions necessary to meet future workforce needs. Procurement: The process by which the state obtains necessary goods or products from nongovernmental vendors. (Note: We consider procurement of goods or products different from contracting for services.) The information included in this report is current as of February 1, h13