The Pains and Pleasures of Restructuring


The Pains and Pleasures of Restructuring

Monday, June 27th, 2011 - 11:23
Big problems call for big solutions. And so, with the states mired in historically unpleasant fiscal times, many have decided they need to go far beyond Band-Aid solutions in favor of tourniquets and transplants.

As John Thomasian, director of the NGA Center for Best Practices told us, “They’ve not just been streamlining government because it’s a luxury but because it was a necessity.”

In fact, according to the NGA Center,  in 2009 and 2010, “At least 15 states conducted government wide efficiency reviews to identify areas of state government that can be made more efficient and less costly; at least 18 states have reorganized agencies.”

And more are underway. The Virginia Governor’s Commission on Government Reform and Restructuring has recommended consolidating the state’s accounting and payroll systems. Washington’s legislature just approved a merger of five administrative departments into three. And Oregon’s Reset Commission Report in June 2010 recommended a shared services model for school districts by July 1, 2012. The commission estimated that mandated consolidation of back office services could save $40 million a year.

The same kind of thinking is gaining traction on the federal side as well.

As President Barack Obama put it, “We cannot win the future with a government of the past.” The first major effort in this direction is likely to take root in the Commerce Department’s fields of trade and exports. In those areas, overlapping functions among at least a dozen different agencies make it difficult to conduct business efficiently.

The President, asked Jeffrey Zients, the nation’s first Chief Performance Officer to lead the effort and on June 9, Zients and his colleagues delivered a proposal. The President will likely spend the next couple of months reviewing the plan before making a formal statement, according to a June 16 White House briefing.

Baby GorillaBut although there’s a real attraction to restructuring government in a variety of ways, it’s not easy.

Unless these efforts can actually reduce staff, increase productivity or save money by combining back office operations, it can be like reshuffling the chairs on a leaky boat (we hesitate to use the usual cliché’ because we don’t really think the federal government or the states are as bad off as the Titanic). One obstacle, of course, is that when agency roles are changed dramatically in a reorganization it’s likely that someone someplace is going to lose some power. And trying to take power away from a government official can be a little like taking candy from a baby . . .  a baby gorilla.

Consider this comment from an excellent report just released by the Center for American Progress: “No unit of government is so obscure or redundant that an agency head or member of Congress will not stoop to defend it.”

All of which isn’t intended to say that reorganizations can’t be hugely worthwhile efforts. They can. But there’s a lot more to them than just making a rousing speech announcing the creation of a commission.

In many instances, reorganization is painfully slow. For example, back in 2008, Nevada’s government efficiency commission (SAGE) recommended an immediate closure of the Nevada state prison. Immediate was kind of an imprecise word for what actually happened. The recommendation was followed by two years of conflict with the state’s labor unions. Finally, a gradual phase-out plan was adopted, which mandated inmate transfers once a month beginning last July.

“Reorganization problems have to be solved on two levels,” says Thomas H. Stanton a member of the board of directors for the National Academy of Public Administration, “the policy level and the politics level. You have to solve the problem on both levels which is why it took 20 years to create the Department of Transportation from the time some bright person had the thought.”

Of even more consequence, there have been any number of reorganizations that have proven to be not much more than time-consuming paperwork exercises.

Rickie Brunner is senior archivist at Alabama’s Department of Archives and History. She compiled an excellent collection of Alabama’s efforts at government reorganization dating back to 1918. Her findings:  “You don't always save money. Any time you try to do a major reorganization--it takes time and it is a heartburn for a lot of people. . . Sometimes it works real well, but to implement it takes time. . . ”

Sometimes, sadly, reorganizations don’t just have minimal impact – they can even make things worse.  A report from the Performance Evaluation and Expenditure Review Committee in Mississippi in 2005, for example, closely examined four structural changes that had been made in the Mississippi Dept. of Health in 2005. The report cited numerous problems that had occurred as a result of the efforts, including a reduction in accountability over Dept. of Health programs and services, wasted staff resources, employee frustration, the loss of knowledge base and experience due to staff departures, changes and restrictions in the flow of communication.

New Mexico SealThe state of New Mexico offers a fascinating petri dish in which to explore some of the ins and outs of government reorganizations and the story of that state is worth recounting in a little depth.

Chris Krahling, who has held a series of high level positions in New Mexico government, was brought in to oversee the state’s reorganization in 1976. At that time, the state’s, government  was “complicated, confusing, unwieldy and difficult to manage,” he recalls. The motivation at the time wasn’t to save money – the state was pretty flush back then – but to alleviate the enormous problems that stemmed from having 117 agencies each one of which directly reported to the governor.

The legislature helped out by providing about $100,000 for the reorganization effort.  The idea was to do a complete evaluation and analysis of each department of government, what its legislative mandates were,  how it evolved from the time it was created and where it could logically be placed. Krahling’s staff looked at every agency and department to see what the legislature charged them with doing, when they were created and how that agency fit logically in with the rest of government – where there might be duplication or commonalities

The reorganization plan went to the legislature in Feb-March, 1977 and it passed later that year. New Mexico ended up with 12 cabinet departments and most of the 117 agencies ended up within those cabinet agencies.

It wasn’t an easy path. There was a lot of opposition to the plan to begin with – the same kind of opposition that confronts most reorganizations today. For one thing, many of the agency directors were gubernatorial appointees. They had their own centers of power and their own constituents. As Krahling recalls, a typical conversation would go like this: “Chris, I’m all for government reorganization. There’s no question we have to restructure and make this government more accountable, but my agency is a little bit different.

“And then they’d spend the next half hour explaining to me why they needed to maintain their direct communication to the governor’s office and their autonomy. . . . We had lip service from all those men and women saying they agreed, but deep down,  they agreed for everybody but themselves . . .

“Advocacy groups would go to the wall,” says Krahling. “They don’t want to be buried down in the department of social services or the department of health . . . they want their individual autonomy and they want their board making decisions on how money was being spent.”

Still, thanks in large part to the commitment of then-governor Jerry Abodaca, the reorganization was dubbed a success and things hummed along for a while.

Then the next governor, Bruce King, came into office.  “Bruce came in,” recalls Krahling, “and he immediately wanted to change a couple of things because he had his ideas of who he wanted to report directly to him.. . .

“We had established a department of criminal justice, which consolidated everything that happened from the time a crime was committed to going to court and getting sent to jail and then through rehabilitation, parole and release. We had one department of government that did all the things, police and corrections and parole boards and public defenders. It was really resourceful and insightful – unusual at the time.

“But the state police just hated it. They hated being associated with the prisons and with the public defenders’ office. They hated the whole thing. They had a real good relationship with Governor King and when he came back to office, he carved out the state police and set up a department of public safety. . .

“From that point forward, the beat went on. Every time a new governor came in there would be something that would get changed. Every governor had special pet departments and the cabinet got bigger.”

While Krahling regards the reorganization as a long-term success, a  there was a continuing proliferation of government bodies and cabinet secretaries. .

In 2009, toward the end of his two terms, Gov. Bill Richardson  established a  Government Efficiency Task Force, headed up by former Gov. Garrey Carruthers. Some of its methods and ideas were similar to the reorganization effort in the 1970s – not surprising since Krahling was one of a half dozen task force members. But the recommendations hit the legislature during a short session and never made it out of committee. A small amount of money was appropriated to study the issue in 2010 and multiple pieces of legislation were proposed, but, in the words of Krahling “none of the legislation went anywhere.” 

The big question that remains, of course, is how states, cities or the federal government can best go about the task of reorganization in a way most likely to yield positive – and long-lasting – results. We’ll try to answer that question in our next column in this space. Stay tuned.


Image courtesy of m_bartosch /