Efficiency, The Government Way

You have probably heard about the efficiency study that the consulting firm Alvarez and Marsal did for the state government, and charged an undisclosed few tens of millions of dollars for. They studied about one third of the state government and claimed to have found $200 million in efficiency savings. A lot of merry faces in the legislature centered in on this study as the one single solution that would end the state's increasingly serious deficit problem. All we need to do, the argument went, is to apply this to the entire state government and we would cut state spending by $600 million.

Well, I am sorry to spoil the party, but that is not going to happen, and there are three reasons why. 

First, having read the Alvarez report I am fairly convinced that they cherry-picked the part of government where they could find the biggest savings. The rest of the state government is likely not going to deliver the same amount of efficiency savings per $1m spent; the extrapolation of the $200 million reported by Alvarez is simply wrong. 

Secondly, the attitude to efficiency in government is, shall we say, predictable. The Wyoming Tribune Eagle (WTE) reports on a meeting with the state's Efficiency Commission, where the Department of Administration and Information gave a presentation. From today's WTE, page A2, print edition:
The Department ... focused much of its presentation Tuesday to the commission on span of control. That refers to the managerial layers of an organization and the ratio of workers to supervisors at each level. 
Nothing strange so far. But now is the time to hold on to your hat:
Department Director Dean Fausset said one main recommendation from the study was the need to institute regular analysis of how departments were organized. Too often, as agencies grew in size or shrunk due to cuts, there was no information about how that affected the ratio of employees to managers and how that affected frontline service to the public.
In other words, we must begin the hunt for efficiencies by adding a new function to government: regular analysis of how government is organized. 

In the British comedy series Yes Minister, the Minister of Administrative Affairs, Jim Hacker, asks his permanent secretary, Sir Humphrey Appelby, if it is possible to increase efficiency and reduce costs at the department. Sir Appleby replies that a study had already been done. It resulted in the recommendation of the addition of 500 new employees to study how the department was organized. 

How many new positions will the Wyoming government require in order to find out how it is organized?

Then Director Fausset explained that we can enhance efficiency in government by changing the so-called span of control:
Agency directors should supervise fewer and the (front line) supervisors should supervise more. We found that in some departments, that (formula) was just flip-flopped.
So if we move 100 positions from the "back" to the "front" we increase efficiency in operations. Since this will not result in any cuts in payroll costs, one has to wonder what other efficiency gains there will be from this reshuffling of employees. Increasing the number of employees who process driver license renewals does not cut the cost of government - although having to spend 30 minutes instead of 60 at every time of renewal might make some people less aggravated next time their property taxes are due. 

That's always something.

Back to the WTE:
Fausset said in his own agency, they removed an entire layer of management and shifted eight frontline managers into positions that were directly involved in providing services to other branches of state government. While those transitioned managers didn't experience a pay cut, once they retire or leave the department, they will be replaced by staff at a lower pay rate, eventually saving the department money.
I mean no disrespect to Director Fausset. He is just doing his job. But the people who asked for this entire efficiency study might want to reconsider what they asked for. The fact that there will be some payroll cuts 15-20 years from now is really something to hang your hope on when we have a $1 billion deficit to deal with already in 2020, if not sooner. 

Then the WTE gets to the Department of Education:
An analysis of the state's education department found possible long-term savings in how the state funds transportation. But the upfront cost could be too much for lawmakers to swallow in the short term. One of the findings of the report showed that the state could be better off eliminating a moratorium on buying new school buses. As the current fleet of buses ages, the state will end up spending more on maintenance, which could eventually outpace what the state would spend on buying new buses. 
All other things equal, the reasoning behind this point is good. The problem is that all other things are not equal. School bus services should be funded by a dedicated portion of the local property tax, so that taxpayers and parents can track exactly how much of their money goes toward this particular service. That amount should include a regular deposit toward fleet renewal, thus separating the funding of new buses from the overall state or local government budget. 

Until our beloved elected officials figure that one out, we can pin this cost savings measure on the same board as the need to create a regular organizational study function within the state government. Spend more money now, and save a little bit later. Hopefully. 

But wait - the WTE has one more that could go on the same board:
Another finding was that if school districts were to use software to track bus routes - something only 33 percent do now - there could be opportunities to find ways to improve bus routes and reduce gas costs and driver time
Of course, first we need to buy new software to two thirds of the state's school districts. Then we need to hire consultants to educate the staff on how to use that software. Then we will need a run-in period with increased staffing to make sure the software runs right. Then we need to hire consultants who can work the bugs out of the system. But once that is done, some time 4-5 years from now, we might be able to re-route the school buses and cut down a little bit on fuel costs. And maybe an hour's worth of wages per driver, per week. 

If anyone thinks that the state government here in Wyoming will be able to get out of its deficit problem with just some improvements in efficiency, then I have a bridge to sell you in Brooklyn. This is not going to prevent tax hikes, nor is it going to solve the budget deficit problem. The only way to do that is by structurally reducing spending. Let us start with a real, solid, comprehensive school-choice reform. 

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