February 14, 2011
Budget Cuts and Waste
Not surprisingly, trimming the size and scope of government is painful. Nevertheless, there is an elegant symmetry to budgetary changes that offers real opportunity for public sector leaders. Higher budgets let public managers do more of what is good, while declining budgets offer the chance to do less of what is not good. But, there are impediments to both recognizing and acting upon these opportunities. Changes to public policy can lessen these barriers.
Recognizing inefficiency in government is far more difficult than rhetoric suggests. The private sector has the blessing of the profits to guide decisions. There is no such tool for the public sector – which is why we have a public sector in the first place. All the splendid benchmarking and performance metrics adopted by government in recent decades help, but they are not enough. If government does something of no value with great efficiency, then it is still of no value. As an example, I submit to you the Bureau of Indian Affairs. On the other hand, something necessary, which may have no meaningful performance metrics, is still necessary; think US Navy.
Identifying unneeded parts of government becomes urgent when budgets are tight. There are some examples. Indiana townships are a curious sort of antiquated fraud foisted on taxpayers, but townships are not alone. Colleges teach courses that have crept into irrelevance (or were taught in middle school), towns and counties duplicate services, and local schools build magnificent edifices as memorials to declining enrollment. What is sad, but true, is most resources in government are well spent and many good things are underfunded. Indeed, unlike the private sector, government is wholly in disequilibrium. All agencies are under or over resourced and the spinelessness of across-the-board cuts treat them equally. However, the solution isn’t just recognizing which agency poses the problem, but also affecting change.
Most government rules are designed to hamper managerial discretion. Some rules are in response to legislation, but more often than not, they are an elusive and ultimately disappointing effort to stop men from sinning. For example, a decade ago the Department of Defense was found spending more on processing and auditing travel forms. How did the DoD handle the problem? They chose not to streamline the process and harshly punish cheats, but rather they simply automated the forms. The perverse reality is that the presence of bureaucratic rules tends to result in the advancement of managers who are good at executing and understanding the rules, instead of evaluating their efficacy.
Likewise, personnel systems hinder good management. Public sector unions exist almost solely to make it impossible to eliminate unnecessary or poor employees. Tenure in both colleges and public schools is a higher brow form of the same scam of taxpayers.
We are in for a long and hard slog to fix public finances, and the path to solvency is simple in concept: every government program needs to be reviewed. More importantly, leaders in government need the tools to make changes. Nothing less will do.
About the Author
Educational Attainment, the 21st Century Fund and the Future of SchoolingIndiana ranks 42nd in educational attainment.
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