Lessons Learned

 

Lessons Learned

Implementing Telework: Lessons Learned from Four Federal Agencies

Thursday, June 9th, 2011 - 14:47
Posted by: 
Telework has been touted as a winning strategy for government. A study by the Telework Research Network claims potential savings for the federal gov ernment of nearly $3.8 billion as a result of reduced real estate costs, electricity savings, reduced absenteeism, and reduced employee turnover.

What We Know Now: Lessons Learned Implementing Federal Financial Systems Projects

Monday, November 22nd, 2010 - 14:58
It is imperative that financial management systems and all of their modernization or replacement efforts be managed in an effective, efficient, and transparent manner. Leveraging these 10 principles will help agencies ensure the success of these efforts. Taking a focused look at how to optimize and modernize these systems will not only yield better systems; it will yield better management and provide better accountability for taxpayer dollars.

Stimulus Oversight: A Q&A With California's Laura Chick

Thursday, October 21st, 2010 - 6:32
Wednesday, October 20, 2010 - 07:21
As she watches over California's Recovery Act spending, Laura Chick has to have a "tough outer skin," she told us. “There’s a great deal of resistance and hostility toward my office, my position and my work.

Contracted Versus Internal Assembly for Complex Products: From Deepwater to the Acquisition Directorate in the U.S. Coast Guard

Tuesday, May 25th, 2010 - 13:46
It is important to emphasize that the authors have notattempted to assess or evaluate the transition or Project Deepwater itself.Instead, the report focuses on providing lessons learned from the transitionand offers three recommendations for contract management staff, agencyexecutives, and congressional and executive-level policy makers.

Jerry Friedman interview

Tuesday, February 2nd, 2010 - 20:00
Phrase: 
Jerry Friedman is the Executive Director of the American Public Human Services Association
Radio show date: 
Wed, 02/03/2010
Guest: 
Intro text: 
Leadership; Collaboration: Networks and Partnerships; Strategic Thinking...
Leadership; Collaboration: Networks and Partnerships; Strategic Thinking
Complete transcript: 

Originally Broadcast December 8, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

In many respects, we are a nation at a crossroads. In the delivery of critical human service programs, policymakers and managers must consider issues such as fundamental reform, funding and financing, and program flexibility to focus on outcome measures and not just the process. In the end, the success of human service programs is measured by the health and well-being of this country's citizens.

As part of a series of discussions on managing human service programs, we have broadened our reach in this space and are honored to welcome our special guest this morning, Jerry Friedman, executive director of the American Public Human Services Association.

Good morning, Jerry.

Mr. Friedman: Good morning, Albert. It's a real pleasure to be here.

Mr. Morales: Also joining us in our conversation is Nicole Gardner, vice president and partner in IBM's public sector social services practice.

Good morning, Nicole.

Ms. Gardner: Good morning, Al. Good morning, Jerry.

Mr. Friedman: Good morning.

 

Mr. Morales: Jerry, let's start off by learning a bit more about your organization. Perhaps you can give us an overview of the mission, the history, and the activities of the American Public Human Services Association.

Mr. Friedman: Well, thank you for the opportunity to be here this morning. We always look forward to venues in the public arena where we can talk about human services. The American Public Human Services Association is a 77-year-old organization that started around the same time as the Social Security Act. It was really founded by a group of very visionary administrators who were concerned about what back then they called the distribution of relief. They wanted to have a voice in policy in Washington, D.C., and they wanted to look at best practice. And essentially, that is what our organization has stood for for the past 77 years.

We've undergone several changes. We used to be called the American Public Welfare Association, focusing in on those types of programs. But we've actually broadened our horizon, recognizing that there is a realm of human service programs that need the kind of attention that a national association can give it.

Essentially, our mission is strengthening America through excellence in public human services. I think a lot of people don't realize just how large human services is, and the presence that it has in our society. We are generally one-third to one-half of most state and local budgets, and consequently, we have a large business to run and an obligation to run it effectively. But it also is a compassionate business, so we have kind of this desire to make sure that we're maximizing our resources, but doing it in a kind and compassionate way.

Basically, our association does three things. We work for good public policy. Good public policy meaning that there are adequate resources, that there's flexibility to run the programs, that we can actually look at outcomes and invest in clients rather than in the bureaucracy.

We then work with our members to help them implement that policy in the correct way. We do this through training and research and consulting.

And then the final area that we do is we really work on our public image. I think we can be successful mainly to the extent that the public has confidence in our ability to manage our programs efficiently and effectively. And we do that through radio shows, we do that through our website, through our magazines, publications, newsletters, informing the public as well as the profession is a key component of APHSA.

Mr. Morales: Could you give us a sense then of the scale of the operations at your organization and its affiliates? Can you tell us a little bit about who are some of its members and the size perhaps of your budget and the number of employees?

Mr. Friedman: Sure. In many ways, we serve like the National Governors Association does for governors. We perform the same function for the governors' appointed heads of health and human services programs, the state CEOs.

Our core group really are the states. And I've been very pleased that for the past four years, every state and a number of the territories have been full members of APHSA. That's very important to us, because when we go to Congress and we go to testify to say that we represent states, we truly do. Every state is a member.

We then have several hundred local members, counties, areas as large as New York City and Los Angeles to Tioga County, Pennsylvania, that likes to pride itself in being an area that doesn't have any traffic lights or parking meters, so we have that range. And then we have several thousand individual members.

We're a moderate-sized association. We rely a lot on our membership to provide the kind of support to enhance the field of human services. We have approximately 50 employees; sometimes there are more when we get special grants and projects. And we have an operating budget of around $5 million.

Ms. Gardner: So Jerry, now we understand a little bit more about APHSA. You're the executive director. Can you tell us what you do in your job? What does it entail?

Mr. Friedman: I would say that there are probably three major activities that I'm involved in. The first really is association management. We're unique, I think, in that we have to be very sensitive to the fact that our members operate public entities. We treat every dollar that comes into APHSA as if it was a tax dollar, because in many instances, it is. And so we've very sensitive to making sure that we provide the kind of return on the dollar. So just running the association, our own computer systems, our own budgeting processes, our own personnel, occupies a portion of my time.

Probably the largest portion of it is involving member services: meeting with our members, trying to get a sense of areas that they need us to focus in on; sharing best practice.

And then, of course, there's the work that we do on Capitol Hill and with the administration as well as other associations, partnering with them in trying to obtain good policy, good effective resources in the work that we do in Washington, D.C.

Ms. Gardner: In the context of all that, what are maybe the top three challenges that you face? And what kind of things are you doing to address those challenges?

Mr. Friedman: We certainly have the vast array of human services challenges that all of our members face. Internally, you know, we also have challenges in managing during difficult economic times. When states have downturns, when the revenues decline, that also affects our revenues, so that we've had -- from time to time, had to manage during difficult times.

Staff retention is a big issue for us. We're very fortunate in that being in business for so long and having a reputation, which I think is excellent in this city, we're able to attract very, very talented individuals. They gain national exposure. They get to meet with every state CEO. They get to meet with members of Congress. They get to hang out with other associations. And very often, they get recruited because they are talented. So we probably have a higher -- just by circumstances, a higher ratio of turnover than many other organizations.

And, you know, one of the difficult things for me is that most of our core membership is appointed by governors. When their terms expire, they move on to different things. And we develop these relationships, and it's very difficult sometimes to deal with a lot of turnover within the states.

But I think the main challenge in human services, and I think it's also true for our association and all of its components, is truly our public image. The ability to tell our story not only just in Congress, but to the general public I think is critical. We face very unique challenges in human services. We're one of the few industries that is literally working to put itself out of business. We strive for a better society. We strive to alleviate poverty. We strive to eliminate child abuse. And if we're truly successful, there wouldn't be a need for us.

On the other hand, our failures are very visible. We can be successful in dealing with thousands of children. And when we have that unfortunate situation where a child gets lost, of course the public rightfully is outraged as we are, and that draws attention to us. We conduct our business in the open. We're the American Public Human Services Association, and that means if we make a mistake, you're going to read about in the front pages of the newspaper. And often, corporate America and the business community and even the other nonprofit organizations don't have that kind of exposure. So we have unique problems, but we also have unique opportunities, and I think all of this makes us stronger.

Mr. Morales: So Jerry, with that type of a mission, I'm curious, how did you get started in this field? What prompted you to get into this?

Mr. Friedman: Well, I was very fortunate in that I started my career as a probation officer. That may sound like a very strange answer, but when you think about it, what a probation officer does, there's a law enforcement aspect to it, but then on the other hand, there's kind of a case management function. You know, when somebody's coming out of prison, they need a job, they need housing, they need treatment, they may be addicted to drugs and alcohol and you have to work with that. And what I learned from that experience was that very often, the human services system broke down for people, and it was mainly because of the way that we were structured within a categorical system. And that really shaped a lot of my early thinking about how we could provide services in a different way, how we could have a more coordinated strategy for dealing with the multiple problems that people were facing. And so I had this exposure to the broad array of human services through that experience.

I then was fortunate enough to kind of have a career progression that led me to be a county human services administrator in two different counties in Pennsylvania. And then I became a state director of public welfare in Pennsylvania. Later, in Washington state, I was in charge of the Economic Services Administration. And before my job at APHSA, I was the executive deputy commissioner for the Texas Department of Human Services.

What that gave me, I think, was good, practical experience in actually providing the services at the county level, but then having the state experience. And through that, I touched various systems, everything from health care to child welfare to mental health, drug and alcohol programs. And so when the association was recruiting for a new executive director, I think that they wanted somebody with both state and local experience, and having that kind of broader perspective of having administered a wide array of programs.

Mr. Morales: So as you reflect back on your career, is there one aspect of that that you feel has really shaped your current leadership role and perhaps informed your current style?

Mr. Friedman: Albert, the one asset that I think that I bring to APHSA is a 25-year history of being a member. This association was my safety net. When I absolutely needed information and needed it quickly, I had them on my speed dial. When we had public policy that we needed changed -- I can give you a very good example -- and that was with welfare reform when there was a provision that legal immigrants were not entitled to food stamps. Our state legislature and our governor, I was in Washington state at the time, said this is unacceptable, find a way to make a change. It was APHSA, our association, that led the change in Congress that allowed states to purchase food stamp coupons for this population. So I came in with a great deal of passion about the association and the work that the association does as a consumer and as a member.

So what I bring to the association is I have such talented co-workers, oh, they're working on their Ph.D.s and their law degrees and they're just extraordinary, but I can look at something that crossed my desk and say if I was a member, would this make sense to me? And so as long as I think I can keep that member perspective, I'll be able to enrich the association to some degree.

Mr. Morales: That's fantastic.

What are some of the lessons learned from welfare reform efforts? We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association.

Also joining us in our conversation from IBM is Nicole Gardner.

Jerry, we've used the term "public human services." Can you elaborate exactly what that means?

Mr. Friedman: Well, there's a debate actually on what public human services are. At one point, it was human services that were provided by government employees, but I think that that's changed a great deal with privatization efforts, with partnerships, with contracting. So now we define it more as services provided under the public aegis, where government dollars are used and there's a level of accountability, but it could be provided by a number of different associations, organizations, companies, both private and not-for-profit.

Mr. Morales: Let me go back in time a little bit. In the 1990s, government had made a statement to end welfare as we know it back then, which launched a series of welfare reform initiatives. Could you remind us of some of the key elements of this welfare reform, and from your perspective, how significant a social policy change does this welfare reform effort represent?

Mr. Friedman: If I look back on events that happened in my career, I think welfare reform was probably the most significant change in social policy in my lifetime. And what it did basically was that it ended individual entitlements for people and gave states block grants with considerable flexibility for states and local governments to design programs that made sense to them. Included were some provisions, like time limits, lifetime time limits, work requirements, just a vast array of significant changes to the way that we looked at what had been a dependency program to one that became a program of self-sufficiency.

In many ways, I think some of the lessons that were learned through welfare reform are really beginning to permeate some of the other human services systems as well. But all in all, I think welfare could be considered a successful program in the United States that brought about significant change.

Ms. Gardner: So Jerry, in that context, tell us a little bit about some of the key lessons we learned in welfare reform.

Mr. Friedman: Well, first, if I could just talk a little bit about some of the successes. And you have to realize that the AFDC program had been in existence for many, many years. It was a well-entrenched program basically operated through federal rules. And so when the new law came into effect and states were empowered to develop their own and design their own programs, there was a great deal of both apprehension as well as a great deal of high expectations for welfare administrators who had really wanted to do something different with the program for a considerable period of time.

It's important to note that welfare reform didn't actually start with the new law. There were over 40 states who had gone to the federal government to seek waivers to say we think that we have a better solution to helping people become self-sufficient. And what the federal legislation really was were some of those common threads through all of those various waiver programs.

But when you look at what happened over the course of a decade, there was a 60 percent decline in welfare caseloads in this country. Child support collections for non-custodial parents doubled. Over 1.5 million welfare recipients who had previously never been attached to the workforce had gainful employment and were no longer reliant on the public welfare system to support them. We implemented a national electronic benefits transfer program, a large computerized effort that actually eliminated food stamp coupons in this country. We created hundreds of thousands of child care slots. We invested in prevention programs that resulted in a decline in teen pregnancy among welfare mothers of one-third. And for the first time, reversing a two-decade trend, we actually had a decline in child poverty rates in this country. So by all accounts, you would consider that a success.

Well, there were many lessons to be learned through that. First, there was a really compelling case for change. Welfare dependency was a bad investment strategy, basically supporting somebody. It didn't help grow our society or our economy or the self-image of those who were receiving those benefits. So that we learned that there was kind of both an economic and a moral imperative for change. Yes, indeed, we are a compassionate society. We are our brother's keeper. But on the other hand, we had an obligation to help people maximize their own personal potential and develop their own capacity.

We learned that personal responsibility can be very effective public policy; that in life, there is a quid pro quo; that reciprocity is just the way that we live as Americans, and that its public policy should reflect that. We learned that people can rise to the occasion, that when they were afforded the opportunity, people became job-ready. They invested when there were both incentives positive and negative. People reacted in that they did want better things for their families. We learned, I think, that the best service delivery was designed at the local level. Welfare reform was not a national strategy. It was saying here's the money, here are the resources, develop a local strategy, and that resulted in those successful efforts.

We learned that we had to rely on partnerships, that welfare in this country couldn't be fixed by government. It required corporate America, the business community, the nonprofit world, the faith-based world, education, all coming together in kind of a uniform strategy to help address this. We learned the importance of services coordination and integrating services. What happened with lifetime time limits was that the bar was raised. We had a finite period of time to have people become job-ready or they would lose this safety net. We know that people don't come to welfare offices simply because they have empty wallets and empty pocketbooks, that there's often just a myriad of other problems that exist, and that we needed to address those. And that required the agencies that provided those services to get together in some kind of coordinated strategy. We also learned that there were other multiple strategies that we needed to look at: asset building, predatory lending. You know, there's a whole industry that thrives just because people are living in poverty.

I think the most important lesson, though, was, you know, for years people railed about the public welfare system, and I was one of them, to be honest with you, that it was a failed system. Well, what we learned was it was failed policy. When people are penalized, when their family condition or economic conditions are worse off because they're trying to better themselves and become employed, when they actually lose money, when the most responsible thing that they can do financially for their family is to stay on welfare rather than try to get to work because they'll be worse off, that's failed policy.

When that changed, we demonstrated it was not a failed workforce. The welfare system, this huge entity in this country, literally turned on a dime. Welfare offices almost overnight were transformed from "welfare offices" to "work centers." You know, the message was clear: What can I do to help you get a job today? This magnificent welfare workforce absolutely transformed themselves because they wanted to. They saw firsthand every day how just handing somebody a check and food stamps and hoping that every problem went away was foolish policy. And when that changed and they could make a real difference, they really rose to the occasion.

Ms. Gardner: That's quite a story. So you mentioned a few minutes ago reauthorization. So where are we with the reauthorization of TANF, and kind of what's the status? Where are we going?

Mr. Friedman: TANF was reauthorized after about 12 or 13 continuing resolutions. We just couldn't seem to get congressional attention because of all of the other priorities. And at the very end of the legislative session last year, as part of the Deficit Reduction Act, TANF reauthorization was passed. As an association, we are very concerned about the kind of micromanagement that's been built back into the welfare system. We think that the broad strategy of providing goals for states to reach, and empowering communities to reach those, worked. Clearly demonstrated that. And so we're concerned that we've taken a huge step backwards when it comes to welfare reform. And administrators, rather than talking about how can we get people into gainful employment, how can we help them get better jobs, how can we improve their economic conditions, they're talking about how we can have something count as a work participation credit because of the penalties that they're going to be facing. We're working very hard to minimize any damage as we see it to this program. To continue to empower states, we strive for maximum flexibility, but we're going to have an uphill battle.

Mr. Morales: Now, Jerry, you mentioned earlier that welfare reform really began at the state and local level. And I believe today, we again are seeing state agencies developing innovative public policy agendas to shape the next decade of service to low-income families. Could you elaborate on some of these innovative state programs? What are some of the strengths that you're seeing in some of these programs?

Mr. Friedman: Well, again, I think drawing off some of the success that we had with welfare reform and just looking at public policy that empowers communities, we're seeing this play out in child welfare programs, we're seeing this played out in health care programs. If you went to a Medicaid director 20 years ago and you said what is your job, they would say my job is to pay bills timely, accurately, and efficiently, and basically they did that. If you ask a Medicaid director today what is your job, well, they're part of a governor's health cabinet. They're looking at universal coverage. They're looking at strategies to cover the uninsured. They are looking beyond just paying bills to what are the best treatments and interventions that we can provide? Where do we get a return on the investment? How can we engage consumers? Now can we embrace prevention and wellness programs?

It's an exciting time right now because of a lot of flexibility that's been given to states around health care design. And I would contend that the real leadership for this is not happening within the confines of Washington, D.C., but it's happening in the statehouses throughout the country.

I think the same is true with public child welfare. Welfare administrators are saying, you know, if I could take the resources that it takes to buy foster care and invest in strategies to build stronger families in the beginning, investing in prevention, investing in interventions that help people become better parents up front, then we could save all this money on the back end. But more importantly, children thrive better in families than they do in foster care. It's more than intuitive. It's supported by all the research and by all the evaluations that happen. So what I see happening now are administrators throughout this country, states approaching the federal government just like they did with welfare reform, saying we think we have a better solution based on our local conditions, by the assets and the resources within our community, and our ability to mobilize them.

The other thing that we didn't have 25 years ago, when I was running programs, is we have more supportive technology. It used to be very hard to keep track of all of the records that you needed and the requirements and the rules and regulations when you had six or seven or eight different categorical programs with rules and different requirements. But with computer systems now and the ability to process information, it is much easier, I think, to manage those programs within the compliance rules of the federal government.

Mr. Morales: So Jerry, it sounds like, you know, really workforce strategies are really sort of the key to success here in helping families manage this transition that you describe. But can you give us perhaps some specific examples of programs that are out there that you think are really innovative and are working well?

Mr. Friedman: Well, there are thousands of them. And I think, again, the key was that public administrators were set free to go out and to develop strategies that worked.

You know, one of the things that we used to do, I used to do this when I ran welfare programs, was to go to corporate America and to business and say wouldn't it be nice if you hired somebody off the welfare rolls? You know, it helps the community and it's the right thing to do. Now we can go to corporate America and the business community and say we can help you build your business. We can help your bottom line. We can help your profit. We can do that through tax credits. We can do that through customized job training. We can do that through extended medical assistance coverage and child care subsidies. We can do that through working with new employees to help train them through orientation. So people see this as a better business strategy than they used to as just a social service.

Mr. Morales: So it's about collaboration.

Mr. Friedman: It's about collaboration. It's about partnership. But it's also -- it's about investment. Good public policy, good social policy, good human services policy and making profit don't have to be mutually exclusive principles.

Mr. Morales: That's a very good point.

What emerging technologies hold the most promise for improving human services delivery? We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association. Also joining us in our conversation is Nicole Gardner, vice president and partner in IBM's public sector social services practice.

Jerry, the goal of working with families in a holistic manner to achieve better outcomes has been around for some time. The change to cross-agency program policy and cross-agency funding streams to support that goal have been somewhat elusive at both the federal and the state levels. Whenever an issue bounces around an industry for so many years and doesn't appear to gain traction, one of two things is usually happening: either, one, the topic is of interest, but there's no real intrinsic value, but the parties sort of enjoy talking about it; or more is happening than we all realize. In your opinion, what's happening here?

Mr. Friedman: Well, I think there's a little bit of both to your question, and we're still kind of defining ourselves in human services in our public policy. Very often we find conflicting things with categorical rules that tend to get in the way of integrated strategies. But again, I tend to be optimistic, partially because of the technology, partially because of welfare reform, and to a great extent through the leadership that's coming through human services that are looking at different and more coordinated strategies. The way that we have partnered with the business community, many states now are actually privatizing casework services, something that just didn't exist before. But they're doing it thoughtfully and rationally and in a way that's devised to get better outcomes. I think that it is still a work in progress, but I think more and more, there is a realization that if we are truly to be investing our human resources wisely, this one-half to one-third of local and state budgets, that we need to have the ability to move beyond all of our individual rules and all of our individual program perspective.

There are huge challenges. First off, if you look at the history of human services, it wasn't like it was formed through some kind of great planning strategy. It seemed like Congress would discover a problem, throw some money at it, and hope that it went away. And the residual effect were all these categorical agencies often competing with each other. They had their own infrastructure. They had their own computer systems. They had their own rules and their own regulations. When you couple that with an advocacy community that's pretty singularly focused, we have advocates around hunger, around developmental disabilities, around mental illness, we don't have advocates for services integration. And yet every one of those programs are adversely affected because there's not a single solution or a single cause of many of these maladies that we have in our society. We've begun to rely a little bit better on technology to get us data and to get us information that tells us where we can invest our resources most effectively.

In the health care arena, there's a lot of work that's going on on electronic medical records. In the course of doing that, I think there's a potential to lay a foundation for further integration of human services in this country. In many areas, there are great demonstrations, but we still as a matter of public policy have not embraced this as the way that we should be doing our thinking and investing.

Ms. Gardner: So in the context, Jerry, of the fact that we're looking at a family as a whole in a holistic way, you mentioned the electronic health record, what are some of the other innovations from a technology perspective that help to break down some of those barriers that exist between the competing organizations and the way that the regulations and the laws have developed?

Mr. Friedman: Well, certainly Internet strategies, looking at ways that people can apply for benefits through the Internet, ways that data can be refreshed, where redundancies can be eliminated, I think have great potential. Many states are developing things like kiosks and automated call centers where they can call in and see whether they're eligible. They can do tests, they can do income tests. All of that is still evolving and still growing, but I think is becoming more and more the industry norm.

There are tools that caseworkers are using that I think are pretty exciting that afford not only greater efficiency, but also greater protections. The state of Alabama has just equipped their child welfare workers with electronic notebooks that do amazing things. Caseworkers can do case notes, they can take photos. They can take photos of children that may have scars and abuses that they can forward to their supervisor to say do we go further with this case? They have GPS so that they know where they're at. They can have a level of safety the caseworkers didn't have before.

Also, you know, for many of the challenges that our clients face, technology is a level playing field. When I was working in Austin, Texas, we had a special project where we refurbished computers. We worked with many of the large computer firms, and we provided these to low-income families that otherwise would not be able to have a computer, and it was just amazing to see what children can do when they're set free in this learning environment through the Internet. Again, it's kind of optimistic. I personally am just still learning how to figure out e-mail, but I've got staff that just do amazing things with computers, and they're always trying to educate me.

There also are ways, I think, that we're being able to process information differently. With the old legacy systems and COBOL language and the way that we had to program, literally taking large business applications and trying to retrofit through different algorithms our human services business, often those things got lost in translation. You know, with decision trees and artificial intelligence and more agile and nimble applications, the potential is there. Looking at outcomes, there are a number of different outcome result systems that are being grown by small companies that are approaching human services, and so I think there's vast potential there.

Ms. Gardner: So any time there's an infusion of technology into an environment that has previously not been able to really do much with it, there are usually barriers and challenges that pop up. So what are some of the big challenges to really taking advantage of emerging technologies in your field?

Mr. Friedman: Well, the biggest one for me, and it's kind of a pet rant, is the process that the federal government has for procuring computer equipment. It's called the APD or the advance planning document process. This is a bureaucratic nightmare that's 40 years old, no longer necessary in my estimation. It was created at a time when I think it was appropriate, when computers and computer applications were relatively exotic, they were relatively new. And the federal government was saying, well, listen, why invest in all of these things? Let's look at have some kind of uniform process and see how we can transfer information back and forth. Also to provide a level of fairness in the competitive bid process.

Well, states now have very robust procurement requirements, every bit as robust as anything that the federal government could do. It stalls the procurement of computer equipment. Because it involves, in many instances, multiple federal agencies, each one can trump the other one in terms of the process. It can take two to three years to get approvals. And in some cases, it's just simply the criteria that they have doesn't make sense. I'll give you one example.

There's a dollar limit that if you exceed -- I think it's $5 million; the dollar amount may have changed because I don't do this every day, but it used to be $5 million -- you had to seek the approval of the federal government. Well, I was in Texas, and I was responsible for a 15,000-person workforce. For me to just routinely replace desktop computers after the depreciation life is gone, I had to go and get approval to do that. Now, ironically, if I wanted to hire 100,000 staff, all I had to do was to put in a state plan amendment. Years ago, the Department of Labor did away with this same process because they realized that it was just antiquated. And I think in many ways, by the time they get the approval, the technology's obsolete.

This is something that we have been striving for for at least the past 15 years, to have this reformed or ended or changed. And I think it's just -- you know, if there's anything that the next administration can do to make life easier for state human services administrators, and especially their chief information officers, it's to absolutely reform this system and to have confidence that states make good, thoughtful business decisions about procuring computer equipment.

Ms. Gardner: So let's talk about something that your organization has been working on specifically, something called the "Organizational Effectiveness Institute, Building the 21st Century Workforce." You started this last May, so can you tell us a little bit about this effort? What was it aimed at and what's happening with it?

Mr. Friedman: We have a training/research/consulting practice at APHSA. In many ways, we needed to be clear about our core competencies and to match that with our members' needs. You know, there are dozens of very, very good consulting firms that do training and consulting in this country. We think that we have a unique niche in that we really understand the business of human services. So we began to do a whole series of evaluation of our own programs, asking our members what their needs were. And essentially they're saying that we need help in looking at organizational effectiveness and then developing good leaders.

And the other thing that has always troubled me as a consumer of consulting services and training was that very often we go to a training program and something nice happens, we put it on a shelf, and we get back and our desk is piled high and we kind of forget what we learned through that session. So we're very much into looking at actual products, being able to take something away from this experience. And so we created this concept of having an institute where our members, our states, and in some cases local organizations, would participate not for a one-shot training session, but through a process that would lead to a product.

Now, the workforce institute was particularly interesting because when we meet with our CEOs and we ask them what are your greatest needs, the issue of staff recruitment, retention, early retirements, building a bench for new leadership, I mean, many of my colleagues are my age, you know, baby boomers that are of retirement age, and we stand to lose a significant amount of institutional knowledge as well as leadership if we don't find some way to address that. Well, what we learned through our needs assessment was that very often human resources personnel offices weren't necessarily being seen as a solution, that personnel rules weren't seen as an asset that can help enable addressing that issue.

And so what we did was that we created this institute, and it lasted for a year. There were four group meetings of all of the participants, but then there was a lot of individual consulting and peer consulting, which was very important, that happened in between those meetings. And the end result was that the human resources directors walked away with a product which was a workforce plan that they could take to their governor's office. We actually field tested this by bringing in a number of retired commissioners, secretaries, and directors of human services and saying to them basically if your human resources director submitted this plan to you, is this something that you would support?

And so the end result of this one year was an actual working workforce plan that drilled down beyond, you know, I need 20 caseworkers because my caseloads are going to get this high, but looking at skill sets. Where do you find them? How do you work with the universities? How do you work with the training centers? How do you help grow internally your own training capacity to have this happen? What kind of array of benefits and training opportunities do we create for our workforce? How do we embed quality improvement in the way that we do business? And so it was beyond just how you do a workforce plan. It was how you actually make a more effective organization.

Mr. Morales: So Jerry, along these lines, to be a bit more specific, what are some of the workforce capacity building challenges faced by public human service agencies, and how does the institute seek to assist participants in strengthening agencies' workforces and human resource capacities?

Mr. Friedman: Well, what we're trying to do is to embed a strategic process in looking at our workforce needs. And that, I think, has been a missing element. I think we've done traditional recruiting and we've gotten people that have credentials. But when we look at the broader strategy of who's coming into human services today and making it a career, quite frankly, I'm a little troubled.

I'm at the tail-end of my career. I'm in my sixties. I was a product of the 1960s and the 1950s, and I was drawn to public service. It wasn't part of my family tradition. I was drawn to public service by the leadership of this country who talked about human services and public service being an honorable thing that should attract the best and the brightest. You know, we had leaders in this country who were great role models, and it troubles me today that we don't kind of have that sense of government as being such an instrument of good. Not to be critical, but when you turn on the radio programs around the country, all you hear is that government wastes this and government does that. I really take exception to that.

I have worked both in corporate America and I have worked in the public sector, and there are challenges in both and there is competence in both, and unfortunately, there's incompetence sometimes in both. But the public business is a little bit unique because it is in the open. And so I think all of that has created an environment where people just aren't as attracted to public service as they used to be. And so what we're trying to do is to rebuild that through reshaping our public image, getting back to the notion that human services is honorable.

We have always known, those of us who got into this, we didn't get into human services for the money. If we did, we made a very dumb decision. We were driven by a different kind of mission, a desire to make a difference in a different kind of way and contribute in a different way. You know, that spirit I think is something that we want to kind of recapture.

Mr. Morales: What about the future of public human services delivery?

We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association. Also joining us in our conversation from IBM is Nicole Gardner.

Jerry, perhaps you could elaborate on the types of public-private partnerships that your members and affiliates engage in to improve operations or outcomes. And in what areas do you think you would like to enhance or expand these types of collaborations?

Mr. Friedman: Well, that's a very good question. In reality, there has always been, I think, a level of partnership between at least public human services and the private sector. Many of the actual services are provided under contract. Many of the charitable faith-based organizations have been dealing with people with needs, material needs, basic needs, other human services needs for years. So when you look at the array of vast human services networks that are out there, very often, the majority of the programs are actually provided within the private sector. However, recently, there has been more and more of a movement towards privatizing some of the core functions that had traditionally been part of government.

I think what we try to do best as a national association is to work with our members to make sure that they have weighed all of the factors they could consider into whether this is a good decision or not. I think the issue isn't the whos. It's more the issue of the whats, and being clear about what the core competencies are. If government entities are going to be contracting, then I think they need different skill sets, or need to emphasize skill sets a little differently. And I think we have a good example.

Twenty years ago, states ran huge data centers with state employees. In many areas, these are now run by corporate America under contract. What happened, though, in the state information technology world was that the core competencies changed. They changed to project management, contract management, automation planning, quality control. And I think the same needs to happen as we start to look at actual service delivery. But if we're going to be farming these activities out to for-profit or not-for-profit organizations, we need to be real clear about what the expectations are: managing those contracts and those projects effectively. And so I think that's the critical issue. It's not who's doing it, it's what's being done, and is it done with the eye of actually providing an improved service delivery system rather than because it seems to be the local trend.

Mr. Morales: So Jerry, obviously you just opened the door for a discussion on the future. What do you see as some of the emerging trends in social welfare policy over, say, the next 5, 6, 7, 10 years?

Mr. Friedman: Well, I think we're at a very exciting time. Again, I think the lessons that were learned from welfare reform, the demonstration that state and local governments really can manage programs effectively, is continuing to evolve and continuing to grow.

I see a number of different trends. I think the movement towards services integration clearly is happening in a lot of different areas. I think categorical agencies are beginning to realize that it takes a holistic approach in order to address the needs of families. I think more and more, state and local governments are looking how to return on investment. You know, is this the best result that we can get for the amount of money that we are investing? And I think it kind of goes beyond just looking at a program from a cost perspective. I think we need to look at it from an outcome perspective.

The continued advancement in technology throughout the entire human services system, from consumers to clients to the way that we process mega data in this country, I think is continuing to evolve. And what I see happening is that major corporations are now investing specifically in human services applications rather than retrofitting business applications to human services.

I think that there's going to be a continued movement towards consumerism. You know, there should be nothing about me without me. More and more clients are saying and progressive human services professionals are saying I need to involve a client in this decision in order to have the best outcome. And so there is more of a kind of openness and a willingness to do this.

And I think in many ways it could also be a cost driver, particularly in the health care arena. We need to have the costs of what it takes in medical care to be transparent. We need to know what they are. Consumerism can do a great deal to drive down costs. I heard Speaker Newt Gingrich talk about the airline industry, and he was talking about the combination of deregulation and the Internet and things like Expedia and Priceline and all those different things have driven down the cost of air miles from 29 cents a mile down to 10. It's just a stunning thing what competition can do and we need to start having that application in human services. I think continued partnerships and having strategic approaches and better use of data will continue to be a part of it.

And obviously volunteerism. We need to rely on a community not only for the services that they provide, but for the engagement. My experience is that when people become exposed to what happens in a human services agency or in a human services program or even in an institution, they become advocates for it when they begin to see what it's like. So I think that those are some of the major trends. I think the bottom line, though, to all of these things is what it has always been, and that's we have to keep the clients first. We can't lose sight of our purpose and our reason for being in the human services business in the first place. And that's because people that are at our desks are there with multitude of problems. They're in pain, they're in need. And so we can set up these elaborate systems, but we can't lose our heart. And I think that that's a lesson that's always with us, and to always acknowledge the awesome responsibility that we have in human services.

I used to tell my co-workers you know that a keystroke on a computer can make the critical difference as to whether a child goes to bed hungry or nourished, and that's just an awesome responsibility that plays out a million times a day in this country, and we don't take credit for it. We don't talk about how often the systems work. We focus in on the failures rather than our successes. And if we're going to really change the human services industry and have it grow and thrive as a viable part of our society, we need to change the public image. We need to be able to tell that story better.

Ms. Gardner: So continuing our theme of looking into the future, Jerry, from a policy perspective on some of the specific programs, you know, what's coming up for Medicaid, for TANF, for child welfare? What's going to happen over the next year or two?

Mr. Friedman: Well, I wish I had a crystal ball that I could say that, because we're caught in competing dynamics. You know, I think that there's a growing awareness among people who pay taxes that they want to see a return on their investment. And I think there's also a real acknowledgement that people do have human needs, and I think we're going to continue to strive for that perfect balance. But again, you know, I keep going back to the lessons that we learned through welfare reform about personal responsibility, about work opportunities, about empowering communities to make a difference. I think that those will continue to grow.

The health care area I think is fascinating because we really are, I think, in the early stages of a transformation. I see it happening again with the Medicaid directors in this country and the role that they're playing and looking at prevention and wellness programs, and I think that that'll continue to be a part of it.

I know the direction I would like to see Congress in the next administration go, and that again is always to empower states, to give them flexibility, to have administrative simplicity, to keep client needs at the forefront. And I think if we do that, we can continue to have a stronger society.

Again, the return on investment I think is really important. We as a human services industry need to talk about the return on investment that society does get. You know, when we think about the food stamp program, we don't think about what it infuses into an economy. It's not just that the people who are low wage are able to have better nutrition, but what does it mean for the grocers and the growers and those that transport food and how it contributes to a stronger society?

Think of a society without human services, what kind of world we would have. And so we're getting a little better at telling our story. And I truly appreciate the opportunity to be on a show like this to talk to your listeners and to tell the human services story, to share our challenges as well as some of the opportunities. And I'm just very, very grateful for this experience.

Ms. Gardner: Well, we're honored to have you. In the context of the story you just told about the profound good that can be done, children being nourished, families being helped, if you were to get your aspiration realized that Congress would be proactive and positive in its treatment of human services policy and legislation going forward, how would you challenge your members to then take those things and move forward to really meet the challenge of improving service delivery and living up to the picture that you've painted so articulately?

Mr. Friedman: Well, I think two things: to think holistically, how the various parts fit together to a system of care; and secondly, keep the clients first, keep the needs of the children in this country and the families who are struggling in this country. Unfortunately, I can walk out of this nice building in downtown Washington, D.C., and before I hit the next corner, I will be able to see the failures of our society, where people who have been left out and left behind, the homeless population, who aren't afforded, for whatever reasons, the opportunity to participate in the wealth of this great country. You know, we'll always have our work to do. So those are the things, the messages that I would give.

Mr. Morales: Jerry, it's hard not to be moved by your passion and dedication to public human services, so I'm curious, what advice could you give to someone out there who perhaps is thinking about starting a career in public service and perhaps in particular interested in working in the area of public human services?

Mr. Friedman: Well, I think that the best experience really is hands-on. I always encourage people to volunteer, to spend time in public facilities, nursing homes, to talk to people who have needs to see where their strengths and where they can contribute. I think that that's the greatest thing is through the exposure. You know, we appreciate all of the courses in social work and public policy that happen, but I think it's that hands-on experience, that personal passion that somebody can have, and the exhilaration of actually seeing somebody who has improved the quality of their lives because you've been there, because you've been working with them, because you've tutored somebody who was illiterate and now they're job-ready. I mean, I just can't tell you. It's like maybe the equivalent, the public human services equivalent, of hitting a grand-slam home run in a World Series.

One of the greatest things that I get to do sometimes is to go to graduation classes of public welfare agencies, where they've taken people who had not been job-ready and they're out and they're ready to join the workforce or perhaps they're already working, to see the transformation in their lives. They have a client come back to them and say thank you, you made a difference.

Just one quick story. When I was a probation officer, I had a huge caseload. I didn't always I mean, you had to kind of triage. And years after I had left this job, I received a call one night at my house and it was from a man and I could tell he was obviously very emotional. And he asked if I was the probation officer that had his case, you know, 5, 10 years earlier. And I had to really search my memory banks, and indeed, it was and I did remember that. And what he wanted to tell me was that he was in the hospital, his wife had just given birth to his first child, a son, and that he wanted me to know I was the second call that he made -- the first was to his parents -- that he would not have had that thrilling opportunity to be a parent had I not intervened in his life in an early stage when he was struggling with substance abuse. Now, I barely remembered the case and I didn't do great casework. I gave him a choice: you're going to rehab or you go to jail, you know. But obviously it made an impact on this person. I hadn't thought of that case in years, but to get that phone call is something that just stayed with me for the rest of my life.

We don't always know that we make a difference. And so that's what I would tell people, that if they want a career where they can have those kind of rewards and benefits, then human services is a place that they ought to look.

Mr. Morales: That's absolutely wonderful. Jerry, unfortunately, we have reached the end of our time. I want to thank you for fitting us into your busy schedule. But more importantly, Nicole and I would like to thank you for your dedicated service across the many years and roles that you've had in the area of public human services.

Mr. Friedman: Thank you very much. I appreciate it. If people want to find more about the American Public Human Services Association I urge them to take a look at our website. It has up-to-date information on all of the legislative proposals that are happening in Congress. It's a wealth of information, and it's at www.aphsa.org.

Mr. Morales: Great, thank you. This has been The Business of Government Hour, featuring a conversation with Jerry Friedman, executive director of the American Public Human Services Association.

My co-host has been Nicole Gardner, vice president and partner in IBM's public sector social services practice.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.

Performance Reporting: Insights from International Practice

Thursday, December 17th, 2009 - 20:00
Author(s): 
 

Jerry Friedman interview

Friday, April 18th, 2008 - 20:00
Phrase: 
Leadership; Collaboration: Networks and Partnerships; Strategic Thinking...
Radio show date: 
Sat, 04/19/2008
Guest: 
Intro text: 
Leadership; Collaboration: Networks and Partnerships; Strategic Thinking...
Leadership; Collaboration: Networks and Partnerships; Strategic Thinking
Complete transcript: 

Originally Broadcast December 8, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

In many respects, we are a nation at a crossroads. In the delivery of critical human service programs, policymakers and managers must consider issues such as fundamental reform, funding and financing, and program flexibility to focus on outcome measures and not just the process. In the end, the success of human service programs is measured by the health and well-being of this country's citizens.

As part of a series of discussions on managing human service programs, we have broadened our reach in this space and are honored to welcome our special guest this morning, Jerry Friedman, executive director of the American Public Human Services Association.

Good morning, Jerry.

Mr. Friedman: Good morning, Albert. It's a real pleasure to be here.

Mr. Morales: Also joining us in our conversation is Nicole Gardner, vice president and partner in IBM's public sector social services practice.

Good morning, Nicole.

Ms. Gardner: Good morning, Al. Good morning, Jerry.

Mr. Friedman: Good morning.

 

Mr. Morales: Jerry, let's start off by learning a bit more about your organization. Perhaps you can give us an overview of the mission, the history, and the activities of the American Public Human Services Association.

Mr. Friedman: Well, thank you for the opportunity to be here this morning. We always look forward to venues in the public arena where we can talk about human services. The American Public Human Services Association is a 77-year-old organization that started around the same time as the Social Security Act. It was really founded by a group of very visionary administrators who were concerned about what back then they called the distribution of relief. They wanted to have a voice in policy in Washington, D.C., and they wanted to look at best practice. And essentially, that is what our organization has stood for for the past 77 years.

We've undergone several changes. We used to be called the American Public Welfare Association, focusing in on those types of programs. But we've actually broadened our horizon, recognizing that there is a realm of human service programs that need the kind of attention that a national association can give it.

Essentially, our mission is strengthening America through excellence in public human services. I think a lot of people don't realize just how large human services is, and the presence that it has in our society. We are generally one-third to one-half of most state and local budgets, and consequently, we have a large business to run and an obligation to run it effectively. But it also is a compassionate business, so we have kind of this desire to make sure that we're maximizing our resources, but doing it in a kind and compassionate way.

Basically, our association does three things. We work for good public policy. Good public policy meaning that there are adequate resources, that there's flexibility to run the programs, that we can actually look at outcomes and invest in clients rather than in the bureaucracy.

We then work with our members to help them implement that policy in the correct way. We do this through training and research and consulting.

And then the final area that we do is we really work on our public image. I think we can be successful mainly to the extent that the public has confidence in our ability to manage our programs efficiently and effectively. And we do that through radio shows, we do that through our website, through our magazines, publications, newsletters, informing the public as well as the profession is a key component of APHSA.

Mr. Morales: Could you give us a sense then of the scale of the operations at your organization and its affiliates? Can you tell us a little bit about who are some of its members and the size perhaps of your budget and the number of employees?

Mr. Friedman: Sure. In many ways, we serve like the National Governors Association does for governors. We perform the same function for the governors' appointed heads of health and human services programs, the state CEOs.

Our core group really are the states. And I've been very pleased that for the past four years, every state and a number of the territories have been full members of APHSA. That's very important to us, because when we go to Congress and we go to testify to say that we represent states, we truly do. Every state is a member.

We then have several hundred local members, counties, areas as large as New York City and Los Angeles to Tioga County, Pennsylvania, that likes to pride itself in being an area that doesn't have any traffic lights or parking meters, so we have that range. And then we have several thousand individual members.

We're a moderate-sized association. We rely a lot on our membership to provide the kind of support to enhance the field of human services. We have approximately 50 employees; sometimes there are more when we get special grants and projects. And we have an operating budget of around $5 million.

Ms. Gardner: So Jerry, now we understand a little bit more about APHSA. You're the executive director. Can you tell us what you do in your job? What does it entail?

Mr. Friedman: I would say that there are probably three major activities that I'm involved in. The first really is association management. We're unique, I think, in that we have to be very sensitive to the fact that our members operate public entities. We treat every dollar that comes into APHSA as if it was a tax dollar, because in many instances, it is. And so we've very sensitive to making sure that we provide the kind of return on the dollar. So just running the association, our own computer systems, our own budgeting processes, our own personnel, occupies a portion of my time.

Probably the largest portion of it is involving member services: meeting with our members, trying to get a sense of areas that they need us to focus in on; sharing best practice.

And then, of course, there's the work that we do on Capitol Hill and with the administration as well as other associations, partnering with them in trying to obtain good policy, good effective resources in the work that we do in Washington, D.C.

Ms. Gardner: In the context of all that, what are maybe the top three challenges that you face? And what kind of things are you doing to address those challenges?

Mr. Friedman: We certainly have the vast array of human services challenges that all of our members face. Internally, you know, we also have challenges in managing during difficult economic times. When states have downturns, when the revenues decline, that also affects our revenues, so that we've had -- from time to time, had to manage during difficult times.

Staff retention is a big issue for us. We're very fortunate in that being in business for so long and having a reputation, which I think is excellent in this city, we're able to attract very, very talented individuals. They gain national exposure. They get to meet with every state CEO. They get to meet with members of Congress. They get to hang out with other associations. And very often, they get recruited because they are talented. So we probably have a higher -- just by circumstances, a higher ratio of turnover than many other organizations.

And, you know, one of the difficult things for me is that most of our core membership is appointed by governors. When their terms expire, they move on to different things. And we develop these relationships, and it's very difficult sometimes to deal with a lot of turnover within the states.

But I think the main challenge in human services, and I think it's also true for our association and all of its components, is truly our public image. The ability to tell our story not only just in Congress, but to the general public I think is critical. We face very unique challenges in human services. We're one of the few industries that is literally working to put itself out of business. We strive for a better society. We strive to alleviate poverty. We strive to eliminate child abuse. And if we're truly successful, there wouldn't be a need for us.

On the other hand, our failures are very visible. We can be successful in dealing with thousands of children. And when we have that unfortunate situation where a child gets lost, of course the public rightfully is outraged as we are, and that draws attention to us. We conduct our business in the open. We're the American Public Human Services Association, and that means if we make a mistake, you're going to read about in the front pages of the newspaper. And often, corporate America and the business community and even the other nonprofit organizations don't have that kind of exposure. So we have unique problems, but we also have unique opportunities, and I think all of this makes us stronger.

Mr. Morales: So Jerry, with that type of a mission, I'm curious, how did you get started in this field? What prompted you to get into this?

Mr. Friedman: Well, I was very fortunate in that I started my career as a probation officer. That may sound like a very strange answer, but when you think about it, what a probation officer does, there's a law enforcement aspect to it, but then on the other hand, there's kind of a case management function. You know, when somebody's coming out of prison, they need a job, they need housing, they need treatment, they may be addicted to drugs and alcohol and you have to work with that. And what I learned from that experience was that very often, the human services system broke down for people, and it was mainly because of the way that we were structured within a categorical system. And that really shaped a lot of my early thinking about how we could provide services in a different way, how we could have a more coordinated strategy for dealing with the multiple problems that people were facing. And so I had this exposure to the broad array of human services through that experience.

I then was fortunate enough to kind of have a career progression that led me to be a county human services administrator in two different counties in Pennsylvania. And then I became a state director of public welfare in Pennsylvania. Later, in Washington state, I was in charge of the Economic Services Administration. And before my job at APHSA, I was the executive deputy commissioner for the Texas Department of Human Services.

What that gave me, I think, was good, practical experience in actually providing the services at the county level, but then having the state experience. And through that, I touched various systems, everything from health care to child welfare to mental health, drug and alcohol programs. And so when the association was recruiting for a new executive director, I think that they wanted somebody with both state and local experience, and having that kind of broader perspective of having administered a wide array of programs.

Mr. Morales: So as you reflect back on your career, is there one aspect of that that you feel has really shaped your current leadership role and perhaps informed your current style?

Mr. Friedman: Albert, the one asset that I think that I bring to APHSA is a 25-year history of being a member. This association was my safety net. When I absolutely needed information and needed it quickly, I had them on my speed dial. When we had public policy that we needed changed -- I can give you a very good example -- and that was with welfare reform when there was a provision that legal immigrants were not entitled to food stamps. Our state legislature and our governor, I was in Washington state at the time, said this is unacceptable, find a way to make a change. It was APHSA, our association, that led the change in Congress that allowed states to purchase food stamp coupons for this population. So I came in with a great deal of passion about the association and the work that the association does as a consumer and as a member.

So what I bring to the association is I have such talented co-workers, oh, they're working on their Ph.D.s and their law degrees and they're just extraordinary, but I can look at something that crossed my desk and say if I was a member, would this make sense to me? And so as long as I think I can keep that member perspective, I'll be able to enrich the association to some degree.

Mr. Morales: That's fantastic.

What are some of the lessons learned from welfare reform efforts? We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association.

Also joining us in our conversation from IBM is Nicole Gardner.

Jerry, we've used the term "public human services." Can you elaborate exactly what that means?

Mr. Friedman: Well, there's a debate actually on what public human services are. At one point, it was human services that were provided by government employees, but I think that that's changed a great deal with privatization efforts, with partnerships, with contracting. So now we define it more as services provided under the public aegis, where government dollars are used and there's a level of accountability, but it could be provided by a number of different associations, organizations, companies, both private and not-for-profit.

Mr. Morales: Let me go back in time a little bit. In the 1990s, government had made a statement to end welfare as we know it back then, which launched a series of welfare reform initiatives. Could you remind us of some of the key elements of this welfare reform, and from your perspective, how significant a social policy change does this welfare reform effort represent?

Mr. Friedman: If I look back on events that happened in my career, I think welfare reform was probably the most significant change in social policy in my lifetime. And what it did basically was that it ended individual entitlements for people and gave states block grants with considerable flexibility for states and local governments to design programs that made sense to them. Included were some provisions, like time limits, lifetime time limits, work requirements, just a vast array of significant changes to the way that we looked at what had been a dependency program to one that became a program of self-sufficiency.

In many ways, I think some of the lessons that were learned through welfare reform are really beginning to permeate some of the other human services systems as well. But all in all, I think welfare could be considered a successful program in the United States that brought about significant change.

Ms. Gardner: So Jerry, in that context, tell us a little bit about some of the key lessons we learned in welfare reform.

Mr. Friedman: Well, first, if I could just talk a little bit about some of the successes. And you have to realize that the AFDC program had been in existence for many, many years. It was a well-entrenched program basically operated through federal rules. And so when the new law came into effect and states were empowered to develop their own and design their own programs, there was a great deal of both apprehension as well as a great deal of high expectations for welfare administrators who had really wanted to do something different with the program for a considerable period of time.

It's important to note that welfare reform didn't actually start with the new law. There were over 40 states who had gone to the federal government to seek waivers to say we think that we have a better solution to helping people become self-sufficient. And what the federal legislation really was were some of those common threads through all of those various waiver programs.

But when you look at what happened over the course of a decade, there was a 60 percent decline in welfare caseloads in this country. Child support collections for non-custodial parents doubled. Over 1.5 million welfare recipients who had previously never been attached to the workforce had gainful employment and were no longer reliant on the public welfare system to support them. We implemented a national electronic benefits transfer program, a large computerized effort that actually eliminated food stamp coupons in this country. We created hundreds of thousands of child care slots. We invested in prevention programs that resulted in a decline in teen pregnancy among welfare mothers of one-third. And for the first time, reversing a two-decade trend, we actually had a decline in child poverty rates in this country. So by all accounts, you would consider that a success.

Well, there were many lessons to be learned through that. First, there was a really compelling case for change. Welfare dependency was a bad investment strategy, basically supporting somebody. It didn't help grow our society or our economy or the self-image of those who were receiving those benefits. So that we learned that there was kind of both an economic and a moral imperative for change. Yes, indeed, we are a compassionate society. We are our brother's keeper. But on the other hand, we had an obligation to help people maximize their own personal potential and develop their own capacity.

We learned that personal responsibility can be very effective public policy; that in life, there is a quid pro quo; that reciprocity is just the way that we live as Americans, and that its public policy should reflect that. We learned that people can rise to the occasion, that when they were afforded the opportunity, people became job-ready. They invested when there were both incentives positive and negative. People reacted in that they did want better things for their families. We learned, I think, that the best service delivery was designed at the local level. Welfare reform was not a national strategy. It was saying here's the money, here are the resources, develop a local strategy, and that resulted in those successful efforts.

We learned that we had to rely on partnerships, that welfare in this country couldn't be fixed by government. It required corporate America, the business community, the nonprofit world, the faith-based world, education, all coming together in kind of a uniform strategy to help address this. We learned the importance of services coordination and integrating services. What happened with lifetime time limits was that the bar was raised. We had a finite period of time to have people become job-ready or they would lose this safety net. We know that people don't come to welfare offices simply because they have empty wallets and empty pocketbooks, that there's often just a myriad of other problems that exist, and that we needed to address those. And that required the agencies that provided those services to get together in some kind of coordinated strategy. We also learned that there were other multiple strategies that we needed to look at: asset building, predatory lending. You know, there's a whole industry that thrives just because people are living in poverty.

I think the most important lesson, though, was, you know, for years people railed about the public welfare system, and I was one of them, to be honest with you, that it was a failed system. Well, what we learned was it was failed policy. When people are penalized, when their family condition or economic conditions are worse off because they're trying to better themselves and become employed, when they actually lose money, when the most responsible thing that they can do financially for their family is to stay on welfare rather than try to get to work because they'll be worse off, that's failed policy.

When that changed, we demonstrated it was not a failed workforce. The welfare system, this huge entity in this country, literally turned on a dime. Welfare offices almost overnight were transformed from "welfare offices" to "work centers." You know, the message was clear: What can I do to help you get a job today? This magnificent welfare workforce absolutely transformed themselves because they wanted to. They saw firsthand every day how just handing somebody a check and food stamps and hoping that every problem went away was foolish policy. And when that changed and they could make a real difference, they really rose to the occasion.

Ms. Gardner: That's quite a story. So you mentioned a few minutes ago reauthorization. So where are we with the reauthorization of TANF, and kind of what's the status? Where are we going?

Mr. Friedman: TANF was reauthorized after about 12 or 13 continuing resolutions. We just couldn't seem to get congressional attention because of all of the other priorities. And at the very end of the legislative session last year, as part of the Deficit Reduction Act, TANF reauthorization was passed. As an association, we are very concerned about the kind of micromanagement that's been built back into the welfare system. We think that the broad strategy of providing goals for states to reach, and empowering communities to reach those, worked. Clearly demonstrated that. And so we're concerned that we've taken a huge step backwards when it comes to welfare reform. And administrators, rather than talking about how can we get people into gainful employment, how can we help them get better jobs, how can we improve their economic conditions, they're talking about how we can have something count as a work participation credit because of the penalties that they're going to be facing. We're working very hard to minimize any damage as we see it to this program. To continue to empower states, we strive for maximum flexibility, but we're going to have an uphill battle.

Mr. Morales: Now, Jerry, you mentioned earlier that welfare reform really began at the state and local level. And I believe today, we again are seeing state agencies developing innovative public policy agendas to shape the next decade of service to low-income families. Could you elaborate on some of these innovative state programs? What are some of the strengths that you're seeing in some of these programs?

Mr. Friedman: Well, again, I think drawing off some of the success that we had with welfare reform and just looking at public policy that empowers communities, we're seeing this play out in child welfare programs, we're seeing this played out in health care programs. If you went to a Medicaid director 20 years ago and you said what is your job, they would say my job is to pay bills timely, accurately, and efficiently, and basically they did that. If you ask a Medicaid director today what is your job, well, they're part of a governor's health cabinet. They're looking at universal coverage. They're looking at strategies to cover the uninsured. They are looking beyond just paying bills to what are the best treatments and interventions that we can provide? Where do we get a return on the investment? How can we engage consumers? Now can we embrace prevention and wellness programs?

It's an exciting time right now because of a lot of flexibility that's been given to states around health care design. And I would contend that the real leadership for this is not happening within the confines of Washington, D.C., but it's happening in the statehouses throughout the country.

I think the same is true with public child welfare. Welfare administrators are saying, you know, if I could take the resources that it takes to buy foster care and invest in strategies to build stronger families in the beginning, investing in prevention, investing in interventions that help people become better parents up front, then we could save all this money on the back end. But more importantly, children thrive better in families than they do in foster care. It's more than intuitive. It's supported by all the research and by all the evaluations that happen. So what I see happening now are administrators throughout this country, states approaching the federal government just like they did with welfare reform, saying we think we have a better solution based on our local conditions, by the assets and the resources within our community, and our ability to mobilize them.

The other thing that we didn't have 25 years ago, when I was running programs, is we have more supportive technology. It used to be very hard to keep track of all of the records that you needed and the requirements and the rules and regulations when you had six or seven or eight different categorical programs with rules and different requirements. But with computer systems now and the ability to process information, it is much easier, I think, to manage those programs within the compliance rules of the federal government.

Mr. Morales: So Jerry, it sounds like, you know, really workforce strategies are really sort of the key to success here in helping families manage this transition that you describe. But can you give us perhaps some specific examples of programs that are out there that you think are really innovative and are working well?

Mr. Friedman: Well, there are thousands of them. And I think, again, the key was that public administrators were set free to go out and to develop strategies that worked.

You know, one of the things that we used to do, I used to do this when I ran welfare programs, was to go to corporate America and to business and say wouldn't it be nice if you hired somebody off the welfare rolls? You know, it helps the community and it's the right thing to do. Now we can go to corporate America and the business community and say we can help you build your business. We can help your bottom line. We can help your profit. We can do that through tax credits. We can do that through customized job training. We can do that through extended medical assistance coverage and child care subsidies. We can do that through working with new employees to help train them through orientation. So people see this as a better business strategy than they used to as just a social service.

Mr. Morales: So it's about collaboration.

Mr. Friedman: It's about collaboration. It's about partnership. But it's also -- it's about investment. Good public policy, good social policy, good human services policy and making profit don't have to be mutually exclusive principles.

Mr. Morales: That's a very good point.

What emerging technologies hold the most promise for improving human services delivery? We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association. Also joining us in our conversation is Nicole Gardner, vice president and partner in IBM's public sector social services practice.

Jerry, the goal of working with families in a holistic manner to achieve better outcomes has been around for some time. The change to cross-agency program policy and cross-agency funding streams to support that goal have been somewhat elusive at both the federal and the state levels. Whenever an issue bounces around an industry for so many years and doesn't appear to gain traction, one of two things is usually happening: either, one, the topic is of interest, but there's no real intrinsic value, but the parties sort of enjoy talking about it; or more is happening than we all realize. In your opinion, what's happening here?

Mr. Friedman: Well, I think there's a little bit of both to your question, and we're still kind of defining ourselves in human services in our public policy. Very often we find conflicting things with categorical rules that tend to get in the way of integrated strategies. But again, I tend to be optimistic, partially because of the technology, partially because of welfare reform, and to a great extent through the leadership that's coming through human services that are looking at different and more coordinated strategies. The way that we have partnered with the business community, many states now are actually privatizing casework services, something that just didn't exist before. But they're doing it thoughtfully and rationally and in a way that's devised to get better outcomes. I think that it is still a work in progress, but I think more and more, there is a realization that if we are truly to be investing our human resources wisely, this one-half to one-third of local and state budgets, that we need to have the ability to move beyond all of our individual rules and all of our individual program perspective.

There are huge challenges. First off, if you look at the history of human services, it wasn't like it was formed through some kind of great planning strategy. It seemed like Congress would discover a problem, throw some money at it, and hope that it went away. And the residual effect were all these categorical agencies often competing with each other. They had their own infrastructure. They had their own computer systems. They had their own rules and their own regulations. When you couple that with an advocacy community that's pretty singularly focused, we have advocates around hunger, around developmental disabilities, around mental illness, we don't have advocates for services integration. And yet every one of those programs are adversely affected because there's not a single solution or a single cause of many of these maladies that we have in our society. We've begun to rely a little bit better on technology to get us data and to get us information that tells us where we can invest our resources most effectively.

In the health care arena, there's a lot of work that's going on on electronic medical records. In the course of doing that, I think there's a potential to lay a foundation for further integration of human services in this country. In many areas, there are great demonstrations, but we still as a matter of public policy have not embraced this as the way that we should be doing our thinking and investing.

Ms. Gardner: So in the context, Jerry, of the fact that we're looking at a family as a whole in a holistic way, you mentioned the electronic health record, what are some of the other innovations from a technology perspective that help to break down some of those barriers that exist between the competing organizations and the way that the regulations and the laws have developed?

Mr. Friedman: Well, certainly Internet strategies, looking at ways that people can apply for benefits through the Internet, ways that data can be refreshed, where redundancies can be eliminated, I think have great potential. Many states are developing things like kiosks and automated call centers where they can call in and see whether they're eligible. They can do tests, they can do income tests. All of that is still evolving and still growing, but I think is becoming more and more the industry norm.

There are tools that caseworkers are using that I think are pretty exciting that afford not only greater efficiency, but also greater protections. The state of Alabama has just equipped their child welfare workers with electronic notebooks that do amazing things. Caseworkers can do case notes, they can take photos. They can take photos of children that may have scars and abuses that they can forward to their supervisor to say do we go further with this case? They have GPS so that they know where they're at. They can have a level of safety the caseworkers didn't have before.

Also, you know, for many of the challenges that our clients face, technology is a level playing field. When I was working in Austin, Texas, we had a special project where we refurbished computers. We worked with many of the large computer firms, and we provided these to low-income families that otherwise would not be able to have a computer, and it was just amazing to see what children can do when they're set free in this learning environment through the Internet. Again, it's kind of optimistic. I personally am just still learning how to figure out e-mail, but I've got staff that just do amazing things with computers, and they're always trying to educate me.

There also are ways, I think, that we're being able to process information differently. With the old legacy systems and COBOL language and the way that we had to program, literally taking large business applications and trying to retrofit through different algorithms our human services business, often those things got lost in translation. You know, with decision trees and artificial intelligence and more agile and nimble applications, the potential is there. Looking at outcomes, there are a number of different outcome result systems that are being grown by small companies that are approaching human services, and so I think there's vast potential there.

Ms. Gardner: So any time there's an infusion of technology into an environment that has previously not been able to really do much with it, there are usually barriers and challenges that pop up. So what are some of the big challenges to really taking advantage of emerging technologies in your field?

Mr. Friedman: Well, the biggest one for me, and it's kind of a pet rant, is the process that the federal government has for procuring computer equipment. It's called the APD or the advance planning document process. This is a bureaucratic nightmare that's 40 years old, no longer necessary in my estimation. It was created at a time when I think it was appropriate, when computers and computer applications were relatively exotic, they were relatively new. And the federal government was saying, well, listen, why invest in all of these things? Let's look at have some kind of uniform process and see how we can transfer information back and forth. Also to provide a level of fairness in the competitive bid process.

Well, states now have very robust procurement requirements, every bit as robust as anything that the federal government could do. It stalls the procurement of computer equipment. Because it involves, in many instances, multiple federal agencies, each one can trump the other one in terms of the process. It can take two to three years to get approvals. And in some cases, it's just simply the criteria that they have doesn't make sense. I'll give you one example.

There's a dollar limit that if you exceed -- I think it's $5 million; the dollar amount may have changed because I don't do this every day, but it used to be $5 million -- you had to seek the approval of the federal government. Well, I was in Texas, and I was responsible for a 15,000-person workforce. For me to just routinely replace desktop computers after the depreciation life is gone, I had to go and get approval to do that. Now, ironically, if I wanted to hire 100,000 staff, all I had to do was to put in a state plan amendment. Years ago, the Department of Labor did away with this same process because they realized that it was just antiquated. And I think in many ways, by the time they get the approval, the technology's obsolete.

This is something that we have been striving for for at least the past 15 years, to have this reformed or ended or changed. And I think it's just -- you know, if there's anything that the next administration can do to make life easier for state human services administrators, and especially their chief information officers, it's to absolutely reform this system and to have confidence that states make good, thoughtful business decisions about procuring computer equipment.

Ms. Gardner: So let's talk about something that your organization has been working on specifically, something called the "Organizational Effectiveness Institute, Building the 21st Century Workforce." You started this last May, so can you tell us a little bit about this effort? What was it aimed at and what's happening with it?

Mr. Friedman: We have a training/research/consulting practice at APHSA. In many ways, we needed to be clear about our core competencies and to match that with our members' needs. You know, there are dozens of very, very good consulting firms that do training and consulting in this country. We think that we have a unique niche in that we really understand the business of human services. So we began to do a whole series of evaluation of our own programs, asking our members what their needs were. And essentially they're saying that we need help in looking at organizational effectiveness and then developing good leaders.

And the other thing that has always troubled me as a consumer of consulting services and training was that very often we go to a training program and something nice happens, we put it on a shelf, and we get back and our desk is piled high and we kind of forget what we learned through that session. So we're very much into looking at actual products, being able to take something away from this experience. And so we created this concept of having an institute where our members, our states, and in some cases local organizations, would participate not for a one-shot training session, but through a process that would lead to a product.

Now, the workforce institute was particularly interesting because when we meet with our CEOs and we ask them what are your greatest needs, the issue of staff recruitment, retention, early retirements, building a bench for new leadership, I mean, many of my colleagues are my age, you know, baby boomers that are of retirement age, and we stand to lose a significant amount of institutional knowledge as well as leadership if we don't find some way to address that. Well, what we learned through our needs assessment was that very often human resources personnel offices weren't necessarily being seen as a solution, that personnel rules weren't seen as an asset that can help enable addressing that issue.

And so what we did was that we created this institute, and it lasted for a year. There were four group meetings of all of the participants, but then there was a lot of individual consulting and peer consulting, which was very important, that happened in between those meetings. And the end result was that the human resources directors walked away with a product which was a workforce plan that they could take to their governor's office. We actually field tested this by bringing in a number of retired commissioners, secretaries, and directors of human services and saying to them basically if your human resources director submitted this plan to you, is this something that you would support?

And so the end result of this one year was an actual working workforce plan that drilled down beyond, you know, I need 20 caseworkers because my caseloads are going to get this high, but looking at skill sets. Where do you find them? How do you work with the universities? How do you work with the training centers? How do you help grow internally your own training capacity to have this happen? What kind of array of benefits and training opportunities do we create for our workforce? How do we embed quality improvement in the way that we do business? And so it was beyond just how you do a workforce plan. It was how you actually make a more effective organization.

Mr. Morales: So Jerry, along these lines, to be a bit more specific, what are some of the workforce capacity building challenges faced by public human service agencies, and how does the institute seek to assist participants in strengthening agencies' workforces and human resource capacities?

Mr. Friedman: Well, what we're trying to do is to embed a strategic process in looking at our workforce needs. And that, I think, has been a missing element. I think we've done traditional recruiting and we've gotten people that have credentials. But when we look at the broader strategy of who's coming into human services today and making it a career, quite frankly, I'm a little troubled.

I'm at the tail-end of my career. I'm in my sixties. I was a product of the 1960s and the 1950s, and I was drawn to public service. It wasn't part of my family tradition. I was drawn to public service by the leadership of this country who talked about human services and public service being an honorable thing that should attract the best and the brightest. You know, we had leaders in this country who were great role models, and it troubles me today that we don't kind of have that sense of government as being such an instrument of good. Not to be critical, but when you turn on the radio programs around the country, all you hear is that government wastes this and government does that. I really take exception to that.

I have worked both in corporate America and I have worked in the public sector, and there are challenges in both and there is competence in both, and unfortunately, there's incompetence sometimes in both. But the public business is a little bit unique because it is in the open. And so I think all of that has created an environment where people just aren't as attracted to public service as they used to be. And so what we're trying to do is to rebuild that through reshaping our public image, getting back to the notion that human services is honorable.

We have always known, those of us who got into this, we didn't get into human services for the money. If we did, we made a very dumb decision. We were driven by a different kind of mission, a desire to make a difference in a different kind of way and contribute in a different way. You know, that spirit I think is something that we want to kind of recapture.

Mr. Morales: What about the future of public human services delivery?

We will ask Jerry Friedman, executive director of the American Public Human Services Association, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Jerry Friedman, executive director of the American Public Human Services Association. Also joining us in our conversation from IBM is Nicole Gardner.

Jerry, perhaps you could elaborate on the types of public-private partnerships that your members and affiliates engage in to improve operations or outcomes. And in what areas do you think you would like to enhance or expand these types of collaborations?

Mr. Friedman: Well, that's a very good question. In reality, there has always been, I think, a level of partnership between at least public human services and the private sector. Many of the actual services are provided under contract. Many of the charitable faith-based organizations have been dealing with people with needs, material needs, basic needs, other human services needs for years. So when you look at the array of vast human services networks that are out there, very often, the majority of the programs are actually provided within the private sector. However, recently, there has been more and more of a movement towards privatizing some of the core functions that had traditionally been part of government.

I think what we try to do best as a national association is to work with our members to make sure that they have weighed all of the factors they could consider into whether this is a good decision or not. I think the issue isn't the whos. It's more the issue of the whats, and being clear about what the core competencies are. If government entities are going to be contracting, then I think they need different skill sets, or need to emphasize skill sets a little differently. And I think we have a good example.

Twenty years ago, states ran huge data centers with state employees. In many areas, these are now run by corporate America under contract. What happened, though, in the state information technology world was that the core competencies changed. They changed to project management, contract management, automation planning, quality control. And I think the same needs to happen as we start to look at actual service delivery. But if we're going to be farming these activities out to for-profit or not-for-profit organizations, we need to be real clear about what the expectations are: managing those contracts and those projects effectively. And so I think that's the critical issue. It's not who's doing it, it's what's being done, and is it done with the eye of actually providing an improved service delivery system rather than because it seems to be the local trend.

Mr. Morales: So Jerry, obviously you just opened the door for a discussion on the future. What do you see as some of the emerging trends in social welfare policy over, say, the next 5, 6, 7, 10 years?

Mr. Friedman: Well, I think we're at a very exciting time. Again, I think the lessons that were learned from welfare reform, the demonstration that state and local governments really can manage programs effectively, is continuing to evolve and continuing to grow.

I see a number of different trends. I think the movement towards services integration clearly is happening in a lot of different areas. I think categorical agencies are beginning to realize that it takes a holistic approach in order to address the needs of families. I think more and more, state and local governments are looking how to return on investment. You know, is this the best result that we can get for the amount of money that we are investing? And I think it kind of goes beyond just looking at a program from a cost perspective. I think we need to look at it from an outcome perspective.

The continued advancement in technology throughout the entire human services system, from consumers to clients to the way that we process mega data in this country, I think is continuing to evolve. And what I see happening is that major corporations are now investing specifically in human services applications rather than retrofitting business applications to human services.

I think that there's going to be a continued movement towards consumerism. You know, there should be nothing about me without me. More and more clients are saying and progressive human services professionals are saying I need to involve a client in this decision in order to have the best outcome. And so there is more of a kind of openness and a willingness to do this.

And I think in many ways it could also be a cost driver, particularly in the health care arena. We need to have the costs of what it takes in medical care to be transparent. We need to know what they are. Consumerism can do a great deal to drive down costs. I heard Speaker Newt Gingrich talk about the airline industry, and he was talking about the combination of deregulation and the Internet and things like Expedia and Priceline and all those different things have driven down the cost of air miles from 29 cents a mile down to 10. It's just a stunning thing what competition can do and we need to start having that application in human services. I think continued partnerships and having strategic approaches and better use of data will continue to be a part of it.

And obviously volunteerism. We need to rely on a community not only for the services that they provide, but for the engagement. My experience is that when people become exposed to what happens in a human services agency or in a human services program or even in an institution, they become advocates for it when they begin to see what it's like. So I think that those are some of the major trends. I think the bottom line, though, to all of these things is what it has always been, and that's we have to keep the clients first. We can't lose sight of our purpose and our reason for being in the human services business in the first place. And that's because people that are at our desks are there with multitude of problems. They're in pain, they're in need. And so we can set up these elaborate systems, but we can't lose our heart. And I think that that's a lesson that's always with us, and to always acknowledge the awesome responsibility that we have in human services.

I used to tell my co-workers you know that a keystroke on a computer can make the critical difference as to whether a child goes to bed hungry or nourished, and that's just an awesome responsibility that plays out a million times a day in this country, and we don't take credit for it. We don't talk about how often the systems work. We focus in on the failures rather than our successes. And if we're going to really change the human services industry and have it grow and thrive as a viable part of our society, we need to change the public image. We need to be able to tell that story better.

Ms. Gardner: So continuing our theme of looking into the future, Jerry, from a policy perspective on some of the specific programs, you know, what's coming up for Medicaid, for TANF, for child welfare? What's going to happen over the next year or two?

Mr. Friedman: Well, I wish I had a crystal ball that I could say that, because we're caught in competing dynamics. You know, I think that there's a growing awareness among people who pay taxes that they want to see a return on their investment. And I think there's also a real acknowledgement that people do have human needs, and I think we're going to continue to strive for that perfect balance. But again, you know, I keep going back to the lessons that we learned through welfare reform about personal responsibility, about work opportunities, about empowering communities to make a difference. I think that those will continue to grow.

The health care area I think is fascinating because we really are, I think, in the early stages of a transformation. I see it happening again with the Medicaid directors in this country and the role that they're playing and looking at prevention and wellness programs, and I think that that'll continue to be a part of it.

I know the direction I would like to see Congress in the next administration go, and that again is always to empower states, to give them flexibility, to have administrative simplicity, to keep client needs at the forefront. And I think if we do that, we can continue to have a stronger society.

Again, the return on investment I think is really important. We as a human services industry need to talk about the return on investment that society does get. You know, when we think about the food stamp program, we don't think about what it infuses into an economy. It's not just that the people who are low wage are able to have better nutrition, but what does it mean for the grocers and the growers and those that transport food and how it contributes to a stronger society?

Think of a society without human services, what kind of world we would have. And so we're getting a little better at telling our story. And I truly appreciate the opportunity to be on a show like this to talk to your listeners and to tell the human services story, to share our challenges as well as some of the opportunities. And I'm just very, very grateful for this experience.

Ms. Gardner: Well, we're honored to have you. In the context of the story you just told about the profound good that can be done, children being nourished, families being helped, if you were to get your aspiration realized that Congress would be proactive and positive in its treatment of human services policy and legislation going forward, how would you challenge your members to then take those things and move forward to really meet the challenge of improving service delivery and living up to the picture that you've painted so articulately?

Mr. Friedman: Well, I think two things: to think holistically, how the various parts fit together to a system of care; and secondly, keep the clients first, keep the needs of the children in this country and the families who are struggling in this country. Unfortunately, I can walk out of this nice building in downtown Washington, D.C., and before I hit the next corner, I will be able to see the failures of our society, where people who have been left out and left behind, the homeless population, who aren't afforded, for whatever reasons, the opportunity to participate in the wealth of this great country. You know, we'll always have our work to do. So those are the things, the messages that I would give.

Mr. Morales: Jerry, it's hard not to be moved by your passion and dedication to public human services, so I'm curious, what advice could you give to someone out there who perhaps is thinking about starting a career in public service and perhaps in particular interested in working in the area of public human services?

Mr. Friedman: Well, I think that the best experience really is hands-on. I always encourage people to volunteer, to spend time in public facilities, nursing homes, to talk to people who have needs to see where their strengths and where they can contribute. I think that that's the greatest thing is through the exposure. You know, we appreciate all of the courses in social work and public policy that happen, but I think it's that hands-on experience, that personal passion that somebody can have, and the exhilaration of actually seeing somebody who has improved the quality of their lives because you've been there, because you've been working with them, because you've tutored somebody who was illiterate and now they're job-ready. I mean, I just can't tell you. It's like maybe the equivalent, the public human services equivalent, of hitting a grand-slam home run in a World Series.

One of the greatest things that I get to do sometimes is to go to graduation classes of public welfare agencies, where they've taken people who had not been job-ready and they're out and they're ready to join the workforce or perhaps they're already working, to see the transformation in their lives. They have a client come back to them and say thank you, you made a difference.

Just one quick story. When I was a probation officer, I had a huge caseload. I didn't always I mean, you had to kind of triage. And years after I had left this job, I received a call one night at my house and it was from a man and I could tell he was obviously very emotional. And he asked if I was the probation officer that had his case, you know, 5, 10 years earlier. And I had to really search my memory banks, and indeed, it was and I did remember that. And what he wanted to tell me was that he was in the hospital, his wife had just given birth to his first child, a son, and that he wanted me to know I was the second call that he made -- the first was to his parents -- that he would not have had that thrilling opportunity to be a parent had I not intervened in his life in an early stage when he was struggling with substance abuse. Now, I barely remembered the case and I didn't do great casework. I gave him a choice: you're going to rehab or you go to jail, you know. But obviously it made an impact on this person. I hadn't thought of that case in years, but to get that phone call is something that just stayed with me for the rest of my life.

We don't always know that we make a difference. And so that's what I would tell people, that if they want a career where they can have those kind of rewards and benefits, then human services is a place that they ought to look.

Mr. Morales: That's absolutely wonderful. Jerry, unfortunately, we have reached the end of our time. I want to thank you for fitting us into your busy schedule. But more importantly, Nicole and I would like to thank you for your dedicated service across the many years and roles that you've had in the area of public human services.

Mr. Friedman: Thank you very much. I appreciate it. If people want to find more about the American Public Human Services Association I urge them to take a look at our website. It has up-to-date information on all of the legislative proposals that are happening in Congress. It's a wealth of information, and it's at www.aphsa.org.

Mr. Morales: Great, thank you. This has been The Business of Government Hour, featuring a conversation with Jerry Friedman, executive director of the American Public Human Services Association.

My co-host has been Nicole Gardner, vice president and partner in IBM's public sector social services practice.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.

Dick Strasser interview

Friday, May 24th, 2002 - 20:00
Phrase: 
Dick Strasser
Radio show date: 
Sat, 05/25/2002
Guest: 
Intro text: 
Financial Management...
Financial Management
Complete transcript: 

Arlington, Virginia

Tuesday, February 19, 2002

MR. LAWRENCE: Welcome to The Business of Government Hour.I'm Paul Lawrence, a

partner at PricewaterhouseCoopers and the co-chair of The Endowment for The Business of Government.We created The Endowment in 1998 to encourage discussion and research into new ways to improve government effectiveness.Find out more about The Endowment by visiting us on the web at endowment.pwcglobal.com.

The Business of Government Hour features a conversation about management with a

government executive who is changing the way government does business.Our

conversation this morning is with Dick Strasser, chief financial officer and executive vice president of the United States Postal Service.

Good morning, Dick.

MR. STRASSER: Good morning, Paul.How are you?

MR. LAWRENCE: Good, thanks.

And joining us in our conversation is Bill Takis, another PwC partner.

Good morning, Bill.

MR. TAKIS: Good morning, Paul.

MR. LAWRENCE: Well, Dick, I'm sure many people are familiar with the United States Postal Service, and it has received a lot of media attention of late.But perhaps you could describe its missions and its activities for us.

MR. STRASSER: Sure, Paul.Actually, up until 1972, the Post Office Department was actually an agency that had a cabinet level secretary as the Postmaster General, and was treated just as any cabinet level agency was treated.It had appropriations and collected its revenues and put them in the general tax funds of the United States.In 1972 was the advent and implementation of postal reorganization, which was probably a very significant move toward corporatization of the Postal Service.In fact, it was one of the first moves in the world towards that more commercial-based model.

What essentially the reorganization act did was that it provided a set Board of Governors, sort of a board of directors, that are nine Presidentially appointed governors confirmed by the Senate. And they are charged with running the organization as a board would.They hire the Postmaster General and the Deputy Postmaster General, who then become members of the board.And the organization is an independent establishment of the Executive Branch.It's not cabinet level any longer.But it's sort of independent in the sense that we are authorized to collect our own revenues and make our own expenditures, develop our own annual plans, as well as our capital plans.We have authority to borrow and to go into debt.

We also are charged with providing services that fulfill the nation's need for mail service.That includes, of course, universal service, and there are an additional 1.6 to 1.7 million addresses that are added to our network every year just by the means of being created as an address.There is no fee for this network.It's now up to about 138 million addresses.The financial charge that the service has is to break even.

Essentially, as an analyst once told me -- so let me understand this, you're essentially to provide a government service at cost?And I said yes, our revenues are supposed to cover our expenditures.And for the 30-some-odd years that we have been in existence, there have been great strides made in the service levels, the quality of service levels, the efficiency of the organization.And it has provided a pretty much self-financed operation for those 30 years.

MR. LAWRENCE: Well, give us a sense of the size of the Postal Service.How many employees work for the Postal Service and what types of skills are there?I think we all have a picture in our minds of our carrier, but I know a lot more is done.

MR. STRASSER: Well, we have two categories of carriers: city letter carriers and our rural carriers.And they constitute probably somewhere on the order of 280,000 of our people.We have about 300,000 in what we call the clerk craft, which are the clerks who support and offer sales at our retail windows, our post office windows.There are also the clerks who sort the mail, sort the packages, get them ready for the carriers for delivery.We have mail handlers in the processing centers, and they are the material-handling folks who handle all of the containers and the large methods of transporting the mail within our units.We have the vehicle drivers.We have a large fleet of trucks.We also purchase over $5 billion in transportation.So it's large in that sense.

We have a great force of what we call maintenance, but who are also our electronic technicians, to maintain our vast array of automated equipment, which I'd be happy to talk about today.We're very pleased with the progress that we have made in letter mail automation.And of course then, we have our supervisors, our first line supervisors, some 70,000 of those folks, and added to that, the managers, the station managers, the postmasters we have throughout the nation, and those of us who are in management in the administrative functions that create the hierarchy.

MR. TAKIS: Dick, that's quite a scope of operation to the Postal Service.I would like to change the topic a little bit and talk about your background and how you got to this position within the Postal Service.And I'd like to kind of start with a discussion a little bit about your role and responsibility as CFO of the Postal Service.

MR. STRASSER: Certainly, Bill.My area currently encompasses the finance function, as is traditionally known -- the treasurer's function, the comptroller's function.But in addition to that, purchasing and material management is within our purview at headquarters as well as information technology.We have the information platform operation as well as our IT function, all within the umbrella, the broad umbrella I might say, of finance at headquarters.So it's a fairly large chunk of the enabling functions that support the operations and the delivery of the mail.

MR. TAKIS: And it's very similar to what a private sector CFO would see?

MR. STRASSER: We do have a very similar financial pattern.The board has its own external auditors which is a topic of interest in this day and age.We have received --

MR. TAKIS: We ask the questions.

MR. STRASSER: We have received unqualified opinions from our external auditors for several years now.They are supplemented by the internal auditors which is the Office of Inspector General.And so we do issue our financial statements, manage our debt, manage substantial cash flows.We take in in excess of $100 million in receipts for mail services and money orders every day.And we manage those cash flows.And of course, the Treasury Department is our official lending agency.And we work with them on a daily basis to manage that cash flow and manage that debt.�������������

MR. LAWRENCE: Well, Dick, you've talked a little bit about your role as CFO, but how did you begin with the Postal Service and how did you get to the position of CFO?

MR. STRASSER: Well, actually, it goes back 33 years ago.Under the Post Office Department, there was something called the President's Management Intern Program, and I, as a political science major out of undergraduate school, decided that I would like to see what was available to me under that program, passed the necessary interviews and tests, and was interviewed by a number of agencies.

I was interested in social service agencies.And I was seriously interested in doing something, but the social service agencies had their pick of those who had Master's and I was only walking into the program with a Bachelor's.So not that Postal was a second choice, but I had a vast array of other agencies offering me interviews.When I went to the Postal interview, interestingly enough, once the two individuals who were interviewing me decided that they wanted to make me an offer, they asked me what my interest was.If I was interested in employee relations, we had 600,000 employees.If I was interested in transportation, we spend $300 million a year in air, rail, sea, mule to the bottom of the Grand Canyon transportation.If I was interested in facilities, we had this vast array of post offices across the nation.Interested in finance?Back then, we had a revenue stream of $9 billion a year.So it sounded very intriguing because they had a program that was 4-1/2 years in length with rotating work assignments through all these functions.So you could truly become a generalist.

So I signed up, not really expecting to make it a full career.But I fell into some pleasant assignments early on and it clicked.

MR. TAKIS:During your time in the Postal Service, you spent time in different assignments?

MR. STRASSER: Yes, I had the opportunity to work in finance initially.And then I had an opportunity to be Acting Postmaster in Walnut Creek, California way back in '72; worked in our Western Region back in that period of time in the delivery area -- actually worked for Tom Donohue, who was with the Postal Service and who is now President of the U.S. Chamber of Commerce, back then.

My most renowned assignment is that I ended up working in the new marketing area.And I was the product manager for our Express Mail Service when we introduced it in 1970.And I worked on that for a year and a half with some of the very, very great people, looking back.A guy by the name of Buford Knowles (?), who really drove it through our organization as an acceptance, and we were setting the prices and had our own little test bed in order to make it work.And it turned out that it was a new class of mail; the first new class of mail since 1913.

So it was a great opportunity early on to rotate through the different assignments and gain knowledge about the organization very, very early in my career.

MR. LAWRENCE: Of all the assignments you have held, what do you think best prepared you for your present job?

MR. STRASSER: I guess I'd have to say that it was back in 1980.I had been in customer service in marketing, and then a career Postmaster General, Bill Bolger, created the strategic planning area.And Bill Cummings, who was the Assistant Postmaster General, called on me to join him in creation of that.And we developed a strategic planning process for the Postal Service in the early '80s.And there was a lot of strategic thought going on and there were a lot of excellent ideas.For example, letter mail automation was on the early drawing boards.And it was just a matter of congealing that into a strategic plan for the organization.And in order to do that, you really had to have, or tried to have gained a strategic knowledge.So I became a real student of the organization's finances, its background in debt management, and what kinds of things we might need to finance automation, and things of that nature.And I think that helped an awful lot towards preparing me for my present role.

MR. LAWRENCE: That's a good stopping point.It's time for a break.

Stick with us as we continue our conversation with Dick Strasser of the Postal Service.In our next segment, we'll ask him how the events of 9/11 have affected the Service.

This is The Business of Government Hour. (Intermission)

MR. LAWRENCE: Welcome back to The Business of Government Hour.I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Dick Strasser, chief financial officer and executive vice-president of the United States Postal Service.

Joining us in our conversation is another PwC partner, Bill Takis.

MR. TAKIS: Now, Dick, besides the FAA, the Postal Service has probably been the agency

that has been most affected by the effects of 9/11 and Anthrax.Can you tell us a little bit about how the agency has responded to both of those impacts on the country?

MR. STRASSER: Yes, Bill.Actually, you're right, it was a real jolt.9/11 was a large enough challenge in the sense that the nation's air transportation system, upon which we depend for a lot of the transport of our mail, was affected.But the Anthrax was even more so when we lost two of our employees.And it was a very unfortunate situation.

What's occurred since then is that we've been very, very focused -- focused primarily on the safety and security of the mail: safety of our employees Number One and then the security of the mail, and reinstilling the confidence in the mail system on the part of the public.I think the biggest challenge -- and I think it's been to some degree overcome by the confluence of education and communication -- has been the unknown:the Anthrax being so unknown, being invisible initially, and striking so hard before we ever had the opportunity to begin to understand it.We are well on our way to development of plans.As you know, at this point we are irradiating government mail; the ZIP Codes that are encompassed by the first three digits 202 to 205.We are not irradiating other mail at this point in time.

���������

We are developing a plan that will first of all detect biochemical agents in the mailstream and will enable us to short circuit what happened with the Anthrax that was mailed in Trenton; which was that it flowed downstream to otherfacilities and then got to other people's offices.So we are putting together a plan for the initial expenditure of $500 million, which Congress has appropriated for the security of the mail and the safety of the mailstream.And we hope to have that filed with the Congressional committees in the coming couple ofweeks so that we can proceed forward with that initial introduction of detectionand methods of containing any future currents with regard to bio-chemicals in the mailstream or bio-hazards in the mailstream.

I think we've recovered from that.I think we've generally provided -- for example, our Inspection Service has provided, security assistance to major mailing industry partners so that they can also have the benefit of the expertise that we have, as it relates to mail safety and security.But it definitely was a situation -- it's one of those disconnects that was always said to be coming at us in the 21st Century.Who said life happens while you're making plans, you know,good plans for other things?And it was quite an experience, which I think we've come around in and gotten on top of at this point.

MR. LAWRENCE: How have the events of 9/11 and Anthrax affected the financial situation of the Postal Service?

MR. STRASSER: It threw a crossbody block on us, as well as others in the industry, in the mailing industry.The initial collective pause of virtually everyone in the nation after 9/11 caused volumes to tumble for the first four weeks in the order of about 8 percent, which is very, very significant.Since then, it's been difficult to differentiate the terrorist acts from the recession in terms of mail volume.All that I can tell you is that at this point, for the first five months of this fiscal year, we're looking at a 5 percent reduction in mail volume compared to the same period last year, which is virtually unprecedented, certainly in the 30 years of the Postal Service.

MR. LAWRENCE: What strategies are being employed to cover costs and then meet the revenue shortfall?

MR. STRASSER: We've actually employed significant strategies even before the shortfall in

volume occurred.Last year, and for two years we've been employing a breakthrough productivity model which is based on best practices and spreading best practices across our operations, both in the processing centers and in delivery units.In addition to that, we have a tremendous piece of equipment we call an Automated Flatsorter 100 which we're deploying throughout the nation.And its throughputs and capacities have exceeded our expectations and we've been able to reduce the number of work hours taken to sort flats.

The overall combination of these things has enabled us to reduce our career employment by 21,000 individuals in the last 18 months. And we do that through attrition which we think is the better side of things.So often in the private sector when they do shed people, they have to book the cost of that restructuring and it's substantial cost.So far, we've been able to essentially restructure to the tune of 21,000 career employees, looking forprobably another 10,000 the remainder of this fiscal year, without incurring arestructuring cost in that respect.

MR. LAWRENCE: Is managing through attrition the most effective way to reduce staff?

MR. STRASSER: We think it makes sense in terms of the people impact definitely.And as long as we are able to sustain it, it seems to be the most reasonable approach to it.If we end up in situations where -- for example, we've got some administrative situations in reducing our areas by 20 percent and cutting 800 positions out of headquarters.Unfortunately, in those cases, there may be some very small reductions in force that will have to be employed.

MR. TAKIS: How is the balance done between meeting service levels and reducing staff? It sounds, like in the example of the Flatsorter, technology enables that to take place.Is

Is that true elsewhere as well?

MR. STRASSER: We're pleased to say that with the exception of transportation-related setbacks we had in service, we've been able to sustain the very high levels of service we have attained in the last five or six years which had been prior to that unprecedented.That is not a balance that we -- we talk about doing both, essentially.We want to retain the high levels of service for< all of the services we offer and at the same time, as you say, substitute capital for labor costs and become more efficient at the same time.

MR. TAKIS: We've talked about using technology to improve effectiveness and efficiency and recently your duties were expanded to includethe oversight of the Postal Service's Information Technology Group.Could you tell us why this change was made?

MR. STRASSER: Well, actually, it seemed to be a pretty good fit in the sense that with limited resources, you know, we need to invest in the IT function.And of course, the IT function with the way it changes and accelerates in terms of technology year after year, it can get to be a substantial investment for an organization of our size.We have, of course, a revenue stream of $65 billion and we have numerous locations.We have, for example, an associate office infrastructure that spreads to 8,000 of our facilities and then we use a VSAT capability for another 7,000 of our facilities.So we have 15,000 of our facilities that are tied on our network -- to a central network. And updating that network as well as integrating it across functions with the shared data concepts and the shared applications is a very important concept.��

And I guess what we've done here is that we have established portfolio managers in the IT

function so that they can assist in the integration of these types of future applications that we find will enhance our effectiveness through the entire process.We've got huge efforts in supply chain management.We've got efforts in human capital enterprise we're about to begin, which would be the concept of hire to retire and the entire flow of data, and information, and payroll, and things of that nature. So they are very large enterprise-wide systems that we're attempting to first design through an architecture, and then implement in the coming years, that will gain tremendous efficiencies.

We have, for example, on an E-travel basis, we have a paper list voucher system that makes automatic payments of the Visa card, the GSA Visa card, as well as automatic payments to an individual's bank account for the residual that is due to the individual.And we have 30,000 employees on that system right now.So we're taking paper out of our processes continuously.

MR. LAWRENCE: The E-travel one sounds very interesting.I'm just curious.At the time that people introduced the business case for that, was it easy to see the benefits?Because I have often wondered how it really worked.A spend is introduced by promising benefits in the future and spending money now.And I've wondered how that was really assessed and the decision made.

MR. STRASSER: Well, it was interesting.I came back into headquarters from my previous position as district manager in Northern Virginia while the pilot was just about to be launched.

And I found it interesting.The program managers decided to do it with the officers of the organization first.And that was a risky proposition.But what ended up happening is that they ended up showing that even officers can do it, and it set the tone, I think, because we saw the benefits of the reduction of paper. And the Visa, for example, all your Visa bills are imported into the system automatically.And it's just a tremendous leap forward with what was essentially not a uniquely developed software package; it was a software package off the shelf that was modified just a little bit.

MR. LAWRENCE: Well, that's a good stopping point.

Rejoin us in a few minutes as we continue our discussion with Dick Strasser of the Postal

Service.

Did you ever wonder why stamp prices go up?We'll ask Dick to explain the rate-setting process when The Business of Government Hour continues. (Intermission)

MR. LAWRENCE: Welcome back to The Business of Government Hour.I'm Paul Lawrence, a partner at PricewaterhouseCoopers. Today's conversation is with Dick Strasser, chief financial officer and executive vice-president of the U.S. Postal Service.

Joining us in our conversation is another PwC partner, Bill Takis.

MR. TAKIS: Well, Dick, we've heard that back in September of last year, the Postal

Service filed for a rate increase to raise the stamp price up to 37 cents.Can you tell us a little bit of background on:a) how the decision was made to ask for that rate increase; and b) how that's panning out right now?

MR. STRASSER: Actually, the rate-setting process is unique. Along with postal reorganization came the decision, as part of the legislative process, to set up the Postal Rate Commission, which is an independent commission that regulates only the Postal Service.It doesn't regulate a market or a technology; it regulates just the United States Postal Service.Our competitors participate in the regulation process of us but we don't participate in theirs.But any rate, it is set up such that it takes 10 months to litigate a rate case.And in order to have that amount of time, some future test year has to be set up.

So when we were preparing this rate case, what essentially occurs is the Governors agree with management that perhaps in this case for fiscal year 2003, we would need new rates to break even.So we were dealing with financial forecasts and economic forecasts that didn't have the "R" word in them, nor did it have the terrorist activities of September built in.So we forecasted a test year break even in 2003 fiscal year which incorporated a 37-cent First Class stamp, and on average about an 8 percent rate increase.The Governors approved the filing of that rate case and it was put into the process.

We anticipated, again, the earliest we could have implemented rates under the normal process would be October of 2003.Well, with the advent of the terrorist attacks and with the recession, the downturn in the economy, I thought it was very sharp of the chairman of the Rate Commission to recognize that these were unusual circumstances.And he suggested that maybe the parties, the intervenors who participated in this process, under the leadership of the Postal Service, might be able to come to some settlement agreement rather than go through the entire 10-month litigation, so that it would encompass a lot of the things that had occurred after the filing, after the preparation of the case.In consideration, it might even include an earlier implementation of rates because the shortfall in volume was causing financial pressure on the Postal Service.And that exactly was the case.

And we're pleased that we have an unprecedented settlement agreement that has been filed with the Rate Commission.There are over 50 intervenors who signed on to it, including our competitors.There are five intervenors who didn't, but who are not opposed to it.There is one party that is intervening, and the Rate Commission will give them their hearing.But when all is said and done, it will enable us to have access to the rates we think in the mid-summer, probably, depending on our board's action, somewhere around June 30th, which will infuse about $1 billion into the system.

This will be a very welcomed infusion considering our target is break even.And given this recession and the shortfall in volume, we could have a revenue shortfall this year of somewhere between $2 billion and $4 billion.

So we have an unprecedented situation that is now � the settlement has been filed with the Rate Commission and the Governors have asked the Rate Commission if it would be possible to have a recommended decision by March 25th in order to give them time to consider the Commission's recommended decision and announce an implementation sometime this summer for the rates.

MR. LAWRENCE: I'm curious.You said that normally the rate-setting process took 9 to

10 months, and I'm wondering why that is and if now that it could go faster, if people think it might in the future.

MR. STRASSER: That is certainly a possibility in the future. It definitely needs to be accelerated.In fact, our board had written a letter indicating to the Hill that they thought some flexibility in rate process and rates needed to be built in to provide a continuing process for the future in terms of managing this large organization.For example, in 2000, when gasoline prices spiked, there was really not an easy avenue to put on a surcharge the way we saw other companies in the industry add surcharges for the high fuel costs.So it is possible in the future to not go through the normal litigation.But the litigation of a 10-month period is pretty much what is warranted for due process, given the current construct of the legislation as it relates to rates.

MR. LAWRENCE: The Postal Service was one of the first federal agencies to implement a pay-for-performance program.Can you tell us about what results you have seen so far?

MR. STRASSER: Yes, Paul. I think there is some truth to the adage that sometimes you don't want to be first in line.And the reason I say that is, I think we had an outstanding pay-for-performance process based on economic value added.Unfortunately, it was very complex and it fell to the one line that talked about bonuses, because it was paid after performance was proven to have been achieved.

But we set specific targets, team targets, based on what we call our three areas:customer service; the voice of the employee; and our efficiency, and financial targets.Based on those targets, if the organization generated economic value added under the Stern-Stewart (?) model, that would generate a pool of funds that were enabled to be paid as lump sum pay for performance.The interesting thing about it over the five years is that's the time period when we raised, for example, overnight First Class mail service from 90 percent to 94 percent for the nation.And we have some clusters in the nation achieving 96 percent overnight on time.

We've spread it then to our services, Priority Mail and two- and three-day First Class mail.That was in the service area.In the employee area, we applied it to safety and reducing lost workday injuries.And there is tangible evidence of downward trends in both of those areas over the five years.And in the efficiency areas, we applied it to productivity, and there is tangible evidence of increased productivity there.So the ability to use this as a tool to focus the organization on specific targets as a team and see tangible evidence was well-proven.

The biggest problem was that there was a misunderstanding.When we don't set our own rates, when our target is break even, people don't understandpay-for-performance.They align it to a private sector model that says, well if you didn't make profits, you shouldn't pay bonuses.Well, that was not the case. So what happened in this was our non-bargaining employees, our supervisors and managers, gave up time and half overtime pay, gave up cost of living allowance increases, gave up step increases, in order to participate in this program.So it was truly pay-at-risk based on performance.

And we're moving on.We're in the process of consultation with our supervisors' and Postmasters' associations to design a new step. And we're going to move on to the model that's more individually accountable and things.But we think that for that period of time, the organization as well as provided our customers efficiency and outstanding service for that period of time.

MR. TAKIS: You mentioned just a moment ago the impact of this program on your supervisors and various different employees within the Postal Service. How are they faring with the results of the financial downturn in the economy and the financial situations facing the Postal Service right now?

MR. STRASSER: I think all of our employees have been outstanding in their whole approach right from the terrorist attack on September 11th, when, in fact, our Church Street Station across the street was impacted by -- across the street from the World Trade Center --right through the Anthrax scare.Our employees have just stuck by.And you know, the commercial that we did, I don't know whether you have seen it, was just right on target in terms of their commitment to the mission of the organization.

And it's one of the things that has kept me in this organization is that we're more than a company, more than a for-profit organization.We're an institution with a mission, and the employees have just done an outstanding job.They also recognize that we're in competition; that there are electronic alternatives.And I think there is a genuine concern that we become more efficient.We do have to take more costs out of our system.We do have to work more closely with our unions and our management associations to take out the costs that are now there for grievances and arbitrations and things.We've got to figure out new models to continue to reduce our costs so that we're not passing those on in the form ofincreased rates which could make us non-competitive in the future.

MR. LAWRENCE: The Postal Service has experienced significant management challenges.

That's clear from your descriptions in your answers to the last couple of questions.What lessons have you learned that you could pass on to other leaders facing not exactly the same, but somewhat similar challenges?

MR. STRASSER: Two of the greatest lessons we learned were bring the entire team in, be all-encompassing.We brought our union leadership, our management associations all in on the Anthrax crisis right from the beginning.And then also tap into the best expertise you can find the CDC people, the scientists.We tapped into everybody who could provide us any kind of information, expertise that would do that.The second thing is communicate. And that was a huge challenge.Communicate.And no amount of communications is sufficient.But as long as your employees feel that the communication lines are open, that they have access to information and feedback, you can at least mitigate, to some extent, the crisis mode and you won't have chaos ensue.

MR. LAWRENCE: That's a good stopping point because it's time for a break. Stick with us as we continue our conversation with Dick Strasser of the Postal Service. What new technology might be on the horizon?We'll ask him when The Business of Government Hour continues. (Intermission)

MR. LAWRENCE: Welcome back to The Business of Government Hour.I'm Paul Lawrence, a partner of PricewaterhouseCoopers.This morning's conversation is with Dick Strasser, chief financial officer and executive vice president of the United States Postal Service.

Joining us in our conversation is another PwC partner, Bill Takis.

MR. TAKIS: Now, Dick, the GAO has recently challenged the Postal Service to develop a transformation plan for itself.How do you see that working its way out and how do you see the Postal Service transforming itself into the 21st Century?

MR. STRASSER: Yes, Bill.Actually, it's been a year ago now. GAO put us on their High Risk List.And they were quick to point out that they were putting the Postal Service on the High Risk List not because of the way it was financially or operationally managed currently.What they were saying was that there needed to be structural change to the Postal Service by way of legislation.And they saw that there were so many stakeholders with so many disparate viewpoints that the process for transformation needed to be defined and needed to be rigorously followed so that before a crisis would occur, that in fact the Postal Service was transformed or was reinvigorated, if you will, for another three decades.

What's happened in recent years with growing competition in the package services, as well as electronic alternatives, we've seen at least a slowing of the growth of First Class mail.And this year, ofcourse, we've seen a decline. And so the model that says you can sustain the network and the growth of the network with growing volume is called into question.If you go back to the beginning of the United States Postal Service, we had about 89 billion pieces of mail.We now handle 209 billion pieces of mail. We had 63 million deliveries.We now have 138 million deliveries.Back then, we had 760,000 career employees.We now have about 750,000 career employees.So we've become more efficient in volume per person.

But the fact of the matter is that in the '90s we were not beneficiaries of the growth in the economy the way the dot com growth and other technology growth generated increases in the economy. We were not beneficiaries of that in terms of additional mail volume.In fact, we've seen single piece First Class mail volume, and that's the 34-cent stamp, decline for the last three or four years because of alternatives.

So GAO put us on their High Risk List, and said the Postal Service should provide a transformation plan.And that's what we're in the course of pursuing right now, to be filed at the end of next month, end of March.

MR. LAWRENCE: How long would the transformation take place over?

MR. STRASSER: The way we're approaching it, Paul, is in three stages.The first stage is to outline so that there is no misunderstanding, everything that we as postal management and the Board of Governors have directed us to do within the current legislative mandates that we have.The second phase is, well, what would we recommend we be given in terms of additional latitude,whether that be pricing flexibility, rates flexibility, and other things.And of course, then the third thing is the fundamental question, the public policy question, what are the alternatives? And of course they range from, on one extreme, perhaps, going back to being just a government agency that is subsidized to provide universal mail service, to perhaps on the other extreme of the spectrum full privatization of what we now know as the resources and the operations of the Postal Service.

And so what we're categorizing is our suggestions in those three categories so that Congress will have the opportunity to review this.And how long will it take? Well, we certainly believe that we ought to address these things rapidly. Over the 30-year period, the experiment has worked.We have essentially broken even.We have collected revenues of $1 trillion, 42 billion, and we have expended expenses to run the system of $1 trillion,47 billion.So we've missed break even by $5 billion, which is a lot of money, but it's a half of 1 percent.

We don't know going forward that that will be the situation.And the problem is, prior to reorganization, the Post Office Department was subsidized up to 25 percent of its operating expenses.If we ever got to that position, for example, given our financials in this day and age, we'd be talking about $15 to $20 billion additional federal subsidy to the service.And I don't know that that's really something public policymakers would want to have happen, especially now that our government surplus has diminished.

MR. TAKIS: You talked a little bit about the various stakeholders within the Postal Service and certainly they are very interested, I'm sure, in the transformation of the Postal Service.How have you solicited their feedback; from employees, customers, competitors maybe even?��������

MR. STRASSER: We have extensively solicited feedback on our website.We put out a discussion outline a number of months ago.We've invited comments both in terms of written forums and also at different forums that we've had, at our National Postal Forum -- as you know, we hold those twice a year -- all the way to the point where our board actually has participated in discussion sessions with panels of our larger customers as well as panels of our union representatives and management association representatives.

And all of this is designed to garner as much input in terms of laying out the prospects and the alternatives in the short term, and then, of course, the ultimate model in the longer term, or the choices of models.And then it will really be up to other processes to determine what's the consensus public policy for what the future authorization of the United States Postal Service should be.If it's government-owned, continues to be government-owned, what kind of latitudes do you give it to manage itself in this day and age, as opposed to the day and age when it was established in 1970?

MR. LAWRENCE: Is the conversation even about what measures of success will be, or is that well-understood?

MR. STRASSER: I think that's a good question, Paul.I think measures of success are different things to different stakeholders.And so what needs to occur is there needs to be some kind of confluence or alignment of those indicators.I think there's no doubt that an efficient national mail system generally is something that is ascribed to.

The interesting aspect of it, and you see this going on in the European Post too, is whether you can sustain a system on either a flatline volume, or worse yet, ultimately a volume that is diverted by electronics.How do you do that and maintain financial self-sufficiency?So it really comes down to, as you say, what is that the organization would provide as its mandate; how frequently would it provide it, for example, and things of that nature, and then, of course, at what cost?And are you still going to hold it as needing to be self-sufficient as a public policy?

MR. TAKIS: You mentioned earlier about other foreign postal administrations who are looking at the same types of challenges that you have. Have you looked to them about the way that they have gone about reforming their postal administrations over the last few years?

MR. STRASSER: We have.Although it's really a challenge because their circumstances are significantly different.In Europe, for example, state-owned enterprises are more commonplace.

In the United States, you don't see very many government agencies buying up publicly held companies.You also have the dynamics of the European Union, where some countries are trying to insure that their posts have a competitive edge in terms of being the post for the EU, as opposed to only their country. So there are some parallels.There is some learning there.But there are also some different circumstances, I think.

MR. LAWRENCE: Well, Dick, I want to shift gears here because we're almost out of time, but you've spent your whole career working for the Postal Service.And I'm curious what advice would you give to a young person, perhaps interested in a career at the Postal Service now?

MR. STRASSER: Actually, I think probably now is the best time.Everyone has heard about the Baby Boomers are reaching retirement age, and it's true with our agency.We've actually got a very aggressive development program for our associate supervisors becoming supervisors, first-line supervisors.We've got an advance leadership program that takes individuals out for four weeks of school, classroom training and opportunity to develop.We're about to begin another management intern program that's targeted to bringing outside talent into the organization for specific positions that we foresee; line management positions.So we are gearing up, even more so than we have in recent years, in terms of people development.

And we know we have very talented people within our organization who will step up also.Fortunately, we've got a base, a very large base, of over 700,000 career employees.But for anyone interested, I'd encourage them to go on our website, usps.com., and look at the opportunities, keep an eye open.Here at headquarters, there are opportunities for summer internships of that nature.

And as you can tell, I think, from my whole tone, I wouldn't have traded my 33 years for any kind of other experience.I just have had just a tremendous opportunity for personal development.But I also think I have contributed and been able to contribute in arenas that, you know, would have been very, very difficult to achieve in the private sector, only because I didn't come strictly -- I developed my business background at the Postal Service's sponsorship later in my career.

MR. LAWRENCE: Well, Dick, now we are out of time.Bill and I want to thank you very much for being with us.

MR. STRASSER: Thank you, Paul.

MR. LAWRENCE: And once again, that website?

MR. STRASSER: It's usps.com.

MR. LAWRENCE: Great.

This has been The Business of Government Hour, featuring a conversation with Dick

Strasser, chief financial officer and executive vice president of the United States Postal

Service.

Be sure and visit us on the web at endowment.pwcglobal.com.There, you can learn more about our programs and you can get a transcript of today's interesting conversation. Again, that's endowment.pwcglobal.com. This is Paul Lawrence.See you next week.

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