Transparency, Really?

I am writing to share what I see as an opportunity to solving the current Arizona budget shortfall over the next few years. As I understand the process, the Legislature provides a budget for each agency and, once approved, funding levels are something that the agencies are then left to implement. If a reduction is required, the agency leadership enacts this with furloughs, program benefit eliminations and reductions, staff reductions, and line-by-line eliminations in expenses. The problem inherent with this approach, perhaps a variation of the “agency problem,” is that cuts in administrative expenses or pet projects and funding priorities may take priority over the important value-add components on the front lines of the service delivery system. In other words, the cuts miss the areas of greatest inefficiencies or those not adding value to the agency and its mission.

There are many ways to control this in addition to budgets. Some include appointments of the agency directors, compliance and sunset audits, and administrative oversights, policies and procedures. But there is evidence that these established processes are losing their effectiveness over time, and I believe is why the Legislature has dug in their heels on budgeting. An alternative, more effective approach could build on some legislation passed into law last year.

ARS 41-725 Comprehensive database of receipts and expenditures of state monies is to be implemented “On or before January 1, 2011” and was intended to provide transparency in Arizona’s state government as it has been done already in other states. The law is the right idea but needs to be supplemented with what is called “Performance Metrics” and in doing so, if properly stipulated in the implementation plans of this legislation, will place the performance of the agencies in the clear light of day, create information systems information understandable to everyday citizens, and pay back many times the costs of implementation. “If properly stipulated” is a big if but is absolutely critical; outside independent consultants will be needed but the payoff will be dramatic.

ARS 41-725 goes on to say in section B that “The department must present information in the database in a manner that is intuitive to members of the general public, including graphical representations.” But you won’t hear a lot of support for this from the individual agencies as, not only is it difficult to operate in sunlight, but what metrics or graphical representations to design into this database will not occur naturally to the agencies staff; they need guidance and help. What you will hear is a lot of talk about the size of the project, the “un-funded mandate” and that more time is needed. At best, I am afraid that any real information and transparency will be hidden in an avalanche of detail completely unusable to the general public.

While that legislation is on the right track, it is sure to be blunted and defeated by forces within the Legislature and within the agencies unless the citizens of Arizona prevent this from happening. If this new approach is implemented, all state agencies can then be compelled to make the tough decisions to operate within the providence of their individual agency missions serving the citizens of Arizona and doing so, will dramatically drive down the cost of State Government.

As a former Arizona state employee of two agencies in both an auditing and information systems administration capacity, I have a detailed understanding of some fundamental operational and cultural issues facing the agencies from an insider’s point of view. I don’t pretend to offer a magic bullet solution, State Government is very complex, but there are some strategies that will turn the state around. The power of the possibilities in transparency and presenting performance metrics of the agencies could be astounding.