Jmercier

How does Washington's pension administration compare?

August 5, 2009 in Blog

One of the few benefits of the current economic situation is the renewed interest by government officials to base policies on the ability to reach performance expectations. Of course, to hit performance goals you need to know what benchmarks to use. It looks like the state Department of Retirement Services (DRS) is taking this fact to heart. Here is a copy of a proposed sole source contract posting DRS issued this morning:

"The Department of Retirement Systems (DRS) contemplates awarding a sole source contract to CEM Benchmarking, Inc. (CEM) for a twenty-four month period to provide complete public pension administration benchmarking services. This contract may be extended for up to an additional two, twelve-month periods. Services include preparation of a benchmarking report analyzing and comparing public pension administrative and business functions, coordinating a !
conference for public pension systems, providing 'best practices' on a common public pension administrative aspect, and, providing a peer network forum.

The benchmarking report includes analysis of performance and cost data from a minimum of fifteen public pension administrators, each having more than 200,000 active members and annuitants; analysis of at least twelve common public pension administration activities; analysis of at least five factors contributing to cost differences; and, sufficient statistical analysis to enable DRS to validate these conclusions. CEM will also coordinate a conference for public pension systems, which will cover current issues of interest to public pension administrators; prepare one best practice analysis on a common public pension administration service; and, provide a peer network forum of other public pension systems.

CEM specializes in providing benchmarking services for public pension systems that administe!
r defined benefit and/or defined contribution plans. CEM has a!
lmost twenty years of experience in pension benchmarking and currently maintains over 500 clients worldwide. CEM is the only known specialist able to provide independent analysis of the factors that make public pensions unique.

The contract will be issued on or about August 25, 2009. Offerors contemplating the above requirements are required to submit capability statements detailing their ability to meet DRS’ requirements within five (5) calendar days of this announcement. In the absence of other qualified sources, it is DRS’ intent to make a sole source award of the contract."

It will be interesting to see how Washington's pension system compares. One recent analysis of the state's pension system indicates Washington may be out of the norm in how it invests its portfolio. According to a report by the Evergreen Freedom Foundation:

"The Washington State Investment Board was considered a 'daring, cutting-edge investor,' according to Institutional Investor Magazine, because of its decision to risk more of its pension portfolio on private equity than any other major state plan.

In 2007, the private equity market began to falter, and $154 billion worth of leveraged buyouts were pulled. Private equity investors were warned they could expect lower returns. Despite these facts, the board’s trustees voted to increase the state’s private equity allocation from 17 percent to 25 percent—significantly outpacing the next-most-aggressive state funds in Oregon and Pennsylvania, at 14 percent.

Wilshire Associates reports that across all 125 state pension plans in 2008, the average private equity asset allocation was 5.6 percent. Washington’s 25 percent allocation is more characteristic of an endowment fund than a pension fund.

The state’s priv!
ate equity losses could prove to be worse than what is shown on paper b!
ecause they are illiquid—meaning they are traded infrequently and values are hard to establish. In December 2008, the investment board’s then Executive Director Joe Dear said in an interview that 'private equity is valued on a lag basis, so we haven’t begun to see the real effects of the downturn in the private equity portfolio.'"

Report recommends major IT changes

August 3, 2009 in Blog

A report released earlier this summer could fundamentally alter the state's IT (Information Technology) Governance if acted on by state lawmakers. Among the recommendations include eliminating up to 832 Full Time Equivalent (FTE) IT employees and centralizing the state's IT systems. Titled "An Evaluation of Washington State’s Approach to IT," the report notes:

The State budgeted approximately $1.39 billion on IT personnel, goods, and services for the 2007-2009 Biennium – a 20% increase over the previous biennium. In the face of the current fiscal crisis, now is the time to evaluate ways to improve the efficiency and cost effectiveness of IT. However, efficiency and cost effectiveness alone is not enough. Ultimately, IT must support the business of government. As Gove!
rnor Gregoire stated in the 2009-2011 Budget Highlights:

“These are hard times for everyone. Our families are tightening their belts, and that’s what government needs to do. The State must squeeze every ounce of value out of every taxpayer dollar while maintaining our priorities…”

Here is a summary of the findings and recommendations:

IT FTE
IT costs

IT governance

IT service
IT

IT reforms are!
high on the Governor's agenda for the coming session and will be part of the State Auditor's statewide performance review. These efforts coupled with this report could mean the state's IT systems are in store for a major reboot.

Time to shoot for the moon for real education reform

July 28, 2009 in Blog

40 years ago this month the brave crew of Apollo 11 landed on the moon with Neil Armstrong famously saying, “That’s one small step for a man, one giant leap for mankind.” With this feat America won the race to the moon. Now President Obama is hoping states will shoot for the moon again, this time in a “Race to the Top” for education excellence.

At stake for states is access to $4.35 billion in federal education funds. The catch, however, is that access to these funds is dependent on states demonstrating that they have several education reforms in place.

While some states are in a position to take advantage of these funds and take one giant leap for education performance, Washington unfortunately, is closer to the experience of the failed Apollo 1 mission than the success of Apollo 11.

Confirming this fact, Go!
vernor Chris Gregoire has indicated that Washington is unlikely to satisfy the eligibility requirements for the federal funds.

According to the federal Secretary of Education Arne Duncan:

“Under Race to the Top guidelines, states seeking funds will be pressed to implement four core interconnected reforms.
  • To reverse the pervasive dumbing-down of academic standards and assessments by states, Race to the Top winners need to work toward adopting common, internationally benchmarked K-12 standards that prepare students for success in college and careers.
  • To close the data gap — which now handcuffs districts from tracking growth in student learning and improving classroom instruction — states will need to monitor advances in student achievement and identify effective instructional practices.
  • To boost the quality of teachers and principals, especially in high-poverty schools and hard-to-staff subjects, states and districts should be able to identify effective teachers and principals — and have strategies for rewarding and retaining more top-notch teachers and improving or replacing ones who aren’t up to the job.
  • Finally, to turn around the lowest-performing schools, states and districts must be ready to institute far-reaching reforms, from replacing staff and leadership to changing the school culture.”

Washington’s grade for each of these criteria sadly is failing because powerful leaders of the teachers’ union have consistently opposed bringing constructive change to public schools.

Washington will likely miss out on the first round of “Race to the Top” funds but, like Apollo 11, we can achieve success if state leaders shoot for the moon through real education reform, instead of holding our state back and shooting for just keeping the teachers’ union satisfied.

Stimulus funds GMAP

July 22, 2009 in Blog

Today's GMAP (Government Management Accountability and Performance) public meeting was on the state's stimulus efforts. Lots of interesting tidbits were reported including:

  • $4 billion has been allocated to the state - $827 million spent so far.
  • The Governor believes the states are being used as pawns in a political fight in D.C. on whether the stimulus package is working; she complained that some Senators were questioning the value of the stimulus package prior to her testimony yesterday in Congress on green jobs.
  • The Governor reported that her colleagues expressed concern at the national governors meeting about what type of information is to be reported to the feds and the time line for those reports.
  • The bulk of the state’s stimulus jobs are at Hanford. The Governor is concerned that some of those jobs aren’t being filled by Washingtonians; instead the contractors are hiring out of state workers.
  • The Department of Transportation expects to create or retain 5,000 jobs as a result of stimulus funds.
  • The State has obligated the 4th highest amount of transit funding in the country.
  • The transportation construction market may have hit its saturation point as recent bids are coming in at or above engineer estimates in contrast to previous bids coming in below.
  • There is a high correlation with “legislative earmarks” and projects not coming in on time or on budget due to the circumvention of the normal vetting process and review. 

Here are additional details (click on the links):

Public versus private health care costs

July 9, 2009 in Blog

Depending on your perspective, the decision yesterday by the Public Employees Benefits Board (PEBB) to raise premiums, deductibles, and co-pays for public employees is either a "travesty" or common sense reality.

In a 4-3 vote, the PEBB members decided:

"Due to the state’s budget shortfall, the HCA required that the medical plans meet a budget target that would keep the average employee contribution at around 12%. To do this, the plans increased the costs of certain benefits, deductibles, and out-of-pocket maximums. The employer will continue to pay 88% of the premium costs, based on enrollment across all PEBB medical plans."

This "average employee contribution at around 12%" compares very favorably to those in the private sector that still have jobs and health insurance. According to a 2008 study on state health care costs by the Washington Alliance for a Competitive Economy:

“State employee health care benefits are generous, and the 12 percent share of prem!
iums paid by employees is low. A recent Towers Perrin survey of 200 large employers found that the average employee’s share of health care premiums was 22.6 percent in 2008, up from 20.1 percent in 2003 (Towers Perrin 2008).”

Despite this fact, PEBB member Greg Devereux (head of the Washington Federation of State Employees) had this to say about the vote:

“This today is an absolute travesty...They (the Legislature) won’t tax anybody else, but they’ll tax state employees…I think it’s a crime. The Legislature didn’t have the guts to provide the health care funds. They are destroying the quality of the workforce in this state.”

Needless to say Devereux was among the no votes.

Meanwhile the Seattle Times reports:

"In what is becoming an annual ordeal
for policyholders, Regence BlueShield is raising premiums for 135,000
individual health-plan members in Washington by an average 17 percent
on Aug. 1.

It is the third consecutive year that the state's largest provider of
individual coverage has boosted rates by double digits. And it comes
after two other insurers, Group Health Cooperative and LifeWise Health
Plan of Washington, recently imposed similarly steep premium increases."

Considering the average public employee versus private employee health care costs, was the PEBB's decision "a crime" or instead grounded in economic reality?

It appears the only alternative would be taxes increases or additional service cuts to provide the benefits demanded by Devereux and others.

Sneak peak at supplemental budget

July 2, 2009 in Blog

Although the new fiscal year and biennium are only 1 day old, it's not too early to start thinking about next year's supplemental budget. Based on yesterday's caseload forecast, the Governor is already hinting at what agencies can expect to be proposed.

Here are details on the caseload forecast as reported in The Olympian:

"More Washington residents will receive Medicaid and children’s health assistance in the next two years than earlier forecast, creating a $250 million shortfall in the state’s already-strained budget.

The new forecast was released Wednesday by the Caseload Forecast Council, and Gov. Chris Gregoire’s budget office released an analysis showing that $113.4 million of the expected increase is in aid to needy families that qualify for Medicaid.

An additional $69.6 million!
is for children’s health care, including some children whose families qualify for Medicaid and others whose citizenship has not been verified. General Assistance Unemployed costs also are up $12 million, and nursing-home costs are up by $6 million."

Coupled with last month's poor revenue forecast, the state's new budget is already projected to be in the red. In response, the Governor's budget office (OFM) sent a memo to agency directors yesterday detailing her strategy:

"On June 18, the Governor directed the following administrative actions by cabinet agencies:
  • Full Time Equivalent (FTE) reductions equivalent to a 2 percent reduction in 2009-11 budgeted GFS FTEs.
  • Continuation of specific GFS savings in out-of-state travel and training, personal services contracts, and equipment purchases.
  • Spending restricted to only critically necessary activities.

She also has encouraged non-Cabinet agencies to impose similar measures.

The Governor’s reductions are intended to create savings that mitigate the effect of the June revenue drop. OFM will continue to watch revenue collections and caseload/enrollment projections as we approach the September and November forecast updates for GFS revenues. Ongoing expenditure and revenue pressures will very likely require further action, including revisions in a 2010 supplemental budget. The reductions in this memo represent the first steps toward supplemental budget changes for expenditures funded by the GFS."

Included in the memo are two tables showing the projected FTE and spending reductions. These figures are a good first look at what the Governor may propose in a supplemental budget.

If enacted by agencies, the Governor's proposal would reduce FTEs below budgeted numbers by approximately 642 and spending by $374 million.

While this is a good first step, additional spending corrections by the Legislature next session will be necessary to rebuild the state's rainy day account. Otherwise we may not be able to respond effectively to any future curve balls the struggling economy may throw our way.

Will lawmakers pledge to read healthcare bill before voting?

June 30, 2009 in Blog

2009 may go down in history as one of the most ambitious policy years in history. First there was the 1,073 page federal "stimulus" bill passed by Congress in February. Then last Friday the House passed the 1,200 page cap-and-trade bill. Next up is the restructuring of the nation's health care sector with current proposals totaling hundreds of pages.

Congress is considering these massive proposals under the direction of House Speaker Nancy Pelosi who promised in 2006 to "create the most open and honest government in history," if given power. In fact, she went a step further and said, "Lawmakers must have the opportunity to read every bill before they vote on it. It’s common sense."

With Pelosi running the House, it's safe to assume lawmakers were provided time to read these policy tomes line-by-line before adoption, right?

Wrong.

Bo!
th bills were voted on within hours of the final versions being made available. 

Hoping to change this, one citizen group is asking lawmakers to sign a pledge to read and post online for 72 hours the health care bill before voting. As reported by Politico:

. . . Let Freedom Ring, a group that promotes constitutional government and traditional values, has launched a campaign to get all 535 lawmakers in the House and Senate to pledge to not vote on the health care bill (likely to top 1,000 pages) until they have personally read it and the bill has been posted on the Internet for 72 hours.

“People were shaken into a new state of awareness when people talked about the size of the stimulus bill and the fact that, in all probability, no member of Congress or senator had read the bill,” said Colin A. Hanna, president of Let !
Freedom Ring. “That struck people as inherently absurd, almo!
st in the existential, theater-of-the-absurd sense. We all know lots of bills are not read, but sometimes the scope and nature of a bill rises to a different level than everyday legislation.”

The full text of the pledge reads:

I pledge to my constituents and to the American people that I will not vote to enact any healthcare reform package that:
1) I have not read, personally, in its entirety; and,

2) Has not been available, in its entirety, to the American people on the Internet for at least 72 hours, so that they can read it too.

Simple enough. Read the law you are proposing and allow voters the time to read it as well. Seeing how this is supposed to be the most transparent Congress in history, no doubt Pelosi is encouraging lawmakers to sign this ple!
dge, right?

Additional Information
Lawmakers to arm wrestle Speaker to see copy of cap-and-trade bill before vote

Lawmakers to arm wrestle Speaker to see copy of cap-and-trade bill before vote

June 26, 2009 in Blog

Ok, so the arm wrestling comment was an exaggeration but according to Politico only one copy of the cap-and-trade bill was available on the floor of the House today:

“Republicans say Democrats are ramming their climate-change legislation through the House without enough time for members to read the bill — let alone to understand it — all in violation of their promises about creating a more transparent legislative process.

Rep. Joe Barton (R-Tex.), running the debate for his party, asked repeatedly Friday afternoon if there was even a copy of the current version of the bill anywhere in the House chamber. Democratic Rep. Ellen Tauscher – sitting in the speaker’s chair although she’s already been confirmed as Obama’s undersecretary of State for Arms Control and International Security — repeatedly dod!
ged the question.

Rep. Ed Markey (D-Mass.), one of the bill’s sponsors, finally rose to say that a single copy of the current version of the bill was available at the speaker’s desk and on the Internet, which members would have to leave the floor to access.”

I know democracy can be messy but this is ridiculous. Is it asking too much for members of the House to take the time to at least read and understand this 1,200 page bill before voting?

Additional Information
ReadTheBill FAIL: Cap and Trade Edition
Web voters support 72 hour budget timeout
WPC response to Governor's letter!
on cap-and-trade

King County's sci-fi construction projects: Hulk, Jabba, Kahn and Kirk

June 25, 2009 in Blog

Earlier this week the State Auditor's Office released an accountability audit on King County's compliance with state laws and regulations and its own policies and procedures. The results weren't pretty.

According to the audit:

"Our audit found County officials should improve oversight and safeguards over its cash receipts, expenditures and assets. In many instances, oversight and safeguards were impaired by a lack of sufficient monitoring to ensure policies are complete, followed and staff is adequately trained to operate within those policies.

Further, County officials do not consistently provide or enforce performance measures or expectations in holding staff accountable. As a result, the County exposes itself to greater risk of loss, less ability to control expendi!
tures, and increases the risk for non-compliance with laws, regulations and contractual requirements. Consequently, our audit identified 12 findings."

The Auditor also attempted to conduct a performance audit of the County's construction management practices but terminated the audit "because the County was unable to provide complete and timely access to files and records related to construction projects" that the auditors requested.

Though a long list of problems was identified, perhaps the most curious finding of the audit concerned the County's management of construction records. From the audit (emphasis added):

"For the files we could access, we observed one file group where the naming conventions did not reflect what project or projects the file contained. The files observed were named after popular science fiction characters. >

County personnel stated the County does not have !
standard procedures for naming, organizing and storing electronic records and does not have protocols for file protection or shared drive access and permissions.

Instead, individual project managers are permitted to name their files whatever they want, organize them however they want and establish whatever restrictions to access they want."

So what sci-fi projects was King County engaged in?

In response to an email inquiry the Auditor's office said the files referenced above were named: Hulk, Jabba, Kahn and Kirk.

Though the County may escape the Wrath of Kahn, the wrath of voters is another story. In light of this audit you may start hearing them channeling the Hulk: "D!
on't make me angry, you wouldn't like me when I'm angry."

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Baird tries again for budget transparency

June 19, 2009 in Blog

Washington Congressman Brian Baird (D) once again introduced a resolution this week calling for a 72 hour review period on legislation. Baird's House Resolution 554 is co-sponsored by Rep. John Culberson of Texas (R). Here is the full text of the proposal as introduced on June 17:

RESOLUTION

Amending the Rules of the House of Representatives to
require that legislation and conference reports be available on the
Internet for 72 hours before consideration by the House, and for other
purposes.

SECTION 1. PURPOSE.

    The purpose of this resolution is to:

      (1) Modernize the operations of the House of
      Representatives using information technology that has transformed and
      increased the efficiency of many aspects of American society such as
      financial services and markets, transportation, manufacturing,
      agriculture, and commerce with consumers and businesses.

      (2) Slow the explosive growth of the
      $11,000,000,000,000 national debt of the United States, reduce
      excessive annual budget deficits, and control the size and scope of
      government by ensuring that there is adequate scrutiny of proposals for
      new and amended laws, taxes, and expenditures.

      (3) Enhance public participation in American democracy
      and improve the quality of proposed legislation by allowing the
      opportunity for its review by State and local government officials,
      small business owners, large business leaders, journalists, scientists,
      academics, labor leaders, nonprofit organization leaders, authors of
      weblogs, and interested citizens.

      (4) Help restore public trust in government and enhance
      respect for the House of Representatives and the Congress by ensuring
      that their operations are conducted with the openness, order, and
      dignity befitting the world's oldest democracy.

SEC. 2. AMENDMENTS TO RULE XIII REGARDING AVAILABILITY OF LEGISLATION AND REPORTS.

    (a) Clause 4 of rule XIII of the Rules of the House of Representatives is amended--

      (1) in its side heading, by inserting `legislation and' before `reports';

      (2) in paragraph (a) by striking subparagraph (1) and inserting the following new subparagraph:

    `(1) Except as specified in subparagraph (2), it shall not
    be in order to consider in the House a measure or matter until 72 hours
    (excluding Saturdays, Sundays and holidays except when the House is in
    session on such a day) after the text of such measure or matter (and,
    if the measure or matter is reported, the text of all accompanying
    reports) have been made available to Members, Delegates, the Resident
    Commissioner, and the general public pursuant to subparagraph (3).';

      (3) by adding at the end of paragraph (a) the following new subparagraph:

    `(3) Without further amendment before floor consideration,
    the full text of the measure or matter and each committee report
    thereon shall be posted continuously by means of the Internet in such a
    manner that they are conveniently accessible using existing technology,
    anonymously and at no cost, in a format that is searchable by text.';
    and

      (4) in paragraph (c), by striking `the third calendar
      day' and inserting `at least 72 hours' and by striking `on' and
      inserting `after'.

    (b) Rule XIII of the Rules of the House of Representatives is further amended--

      (1) in clause 5(b), by striking `and the Resident
      Commissioner' and inserting `the Resident Commissioner, and the general
      public'; and

      (2) in clause 6(c), by striking `or' at the end of
      subparagraph (1), by striking the period at the end of subparagraph (2)
      and inserting `; or', and by inserting before the period `a rule or
      order proposing a waiver of clause 4(a) of rule XIII or of clause 8(a)
      or 8(b) of rule XXII, unless a question of consideration of the rule is
      adopted by a vote of two-thirds of the Members voting, a quorum being
      present'.

SEC. 3. AMENDMENTS TO RULE XXII REGARDING AVAILABILITY OF CONFERENCE REPORTS AND AMENDMENTS REPORTED IN DISAGREEMENT.

    Clause 8 of rule XXII of the Rules of the House of Representatives is amended--

      (1) by striking subparagraph (a) and inserting the following new paragraph:

    `(a)(1) It shall not be in order to consider a conference
    report until 72 hours (excluding Saturdays, Sundays and holidays except
    when the House is in session on such a day) after the conference report
    and the accompanying joint explanatory statement have been available to
    Members, Delegates, the Resident Commissioner, and the general public
    pursuant to subparagraph (2).

    `(2) Without further amendment before floor consideration,
    the full texts of the conference report and the accompanying signed
    joint explanatory statement shall be posted continuously by means of
    the Internet in such a manner that they are conveniently accessible
    using existing technology, anonymously and at no cost, in a format that
    can be searched by text.';

      (2) in paragraph (b), by striking subparagraphs (1) and (2) and inserting the following new subparagraphs:

    `(1) It shall not be in order to consider a motion to
    dispose of a Senate amendment reported in disagreement by a conference
    committee until at least 72 hours (excluding Saturdays, Sundays and
    holidays except when the House is in session on such a day) after the
    report in disagreement and any accompanying statement have been
    available to Members, Delegates, the Resident Commissioner, and the
    general public pursuant to subparagraph (2).

    `(2) Without further amendment before floor consideration,
    the full texts of a Senate amendment reported in disagreement and any
    accompanying statement shall be posted continuously by means of the
    Internet in such a manner that they are conveniently accessible using
    existing technology, anonymously and at no cost, in a format that can
    be searched by text.'.

SEC. 4. PROTECTION OF CLASSIFIED INFORMATION.

    Nothing in this resolution or any amendment made by it
    shall be interpreted to require or permit the declassification or
    posting on the Internet of classified information in the custody of the
    House of Representatives. Such classified information shall be made
    available to Members in a timely manner as appropriate under existing
    laws and rules.

SEC. 5. SENSE OF THE HOUSE REGARDING AMENDMENTS.

    It is the sense of the House that, with the objective of
    preventing circumvention of clause 4(a) of rule XIII of the Rules of
    the House of Representatives that the Committee on Rules should develop
    standardized policies and procedures to require that proposed
    amendments (except those offered under an open rule) that are major in
    size, scope, or cost be posted on the Internet for an appropriate
    number of hours.

Additional Information
Web voters support 72 hour budget timeout

The tale of two Washingtons

June 18, 2009 in Blog

Perhaps one of the things most taken for granted about today's state revenue forecast is the fact that no one is fighting over the numbers. When the state's nonpartisan revenue forecast committee issues its projections you don't see dueling press releases from partisans claiming that the numbers are wrong and the state should instead base its projections on the source of a political party's choosing.

Unfortunately the same can't be said about the debate occurring in Washington D.C. concerning the nonpartisan Congressional Budget Office's (CBO) projection on the cost of the health care reforms being considered. As noted by The Hill:

"Democratic leaders are growing frustrated with Senate Republicans and the Congressional Budget Office (CBO) for clouding prospects for timely passage of the healthcare overhaul by way of their critiques . . .

Democratic leaders have also grumbled about the CBO, which released an analysis Monday that may result in Senate Finance Committee Chairman Max Baucus (D-Mont.) delaying action on his panel. CBO has reportedly scored the Finance Committee’s proposals at $1.6 trillion, forcing Baucus to chop the package by $600 billion . . .

Growing frustrations with CBO have spurred some Democrats to consider shelving cost estimates from the agency and using projections from another source, such as the Office of Management and Budget (OMB), which is part of the Obama administration . . .

Peter Orszag, the director of Office of Management and Budget, however, has downplayed the possibility of using projections from his agency instea!
d of CBO.

'CBO scoring is going to be used in t!
his process,' Orszag said late Wednesday."

The whole point of nonpartisan forecasts is to help remove politics from the process and provide accurate information to the public and lawmakers. If those numbers get in the way of speedy action and instead force more thoughtful debate, the only losers are politicians --- not the taxpayers they serve.

Here are additional details on the CBO cost projections.

Has state economy hit bottom?

June 18, 2009 in Blog

Despite a drop in projected revenue, the state's top economist Dr. Arun Raha believes the worst is over. According to Raha the "free fall in the economy is behind us . .. decline in revenue is moderating."

That said, today's news creates additional pressure on the state budget. For the first time since the 2001-03 biennium (impacted by the 9/11 terrorist attack), traditional General Fund revenue collections are projected to be negative biennium over biennium as shown here:

  • 2001-03: $21,141 million (0.6% decrease)
  • 2003-05: $23,389 million (10.6% increase)
  • 2005-07: $27,772 million (18.7% increase)
  • 2007-09: $27,706 million (0.2% decrease)
  • 2009-11: $27,692 million (0.1% decrease)

The impact of this is a reduction in the amount of reserves available for the state to weather any unforeseen bad news. 2007-09 reserves are reduced to $218 million. 2009-11 reserves are reduced to a paltry $53 million, Both reserves are well below one percent of expenditures (a 10 percent reserve is recommended).This includes the constitutional rainy day account.

This past session the legislature changed the definition of the General Fund to include additional accounts. By adding those new accounts the revenue forecast is essentially flat as shown here:

  • 2005-07: $29,785 million (17.3% increase)
  • 2007-09: $29,812 million (0.1% increase)
  • 2009-11: $29,834 million (0.1% increase)

Meanwhile, the Chair and ranking member of the House Ways and Means Committee told the Association of Washington Business (AWB) they see no reason for a special session. As reported by Jason Hagey:

"State Reps. Gary Alexander, R-Olympia, and Kelli Linville, D-Bellingham, agree that Washington legislators should not convene for a special session this year, despite growing budget woes.

Linville told a meeting of the AWB’s Governmental Affairs Council that Gov. Chris Gregoire should use her limited authority to trim the budget enough to get through until January when the Legislature meets again for a regular session."

One of the options for the Governor is found in RCW 43.88.110:

"blockquote" style="margin-left: 40px;">"If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods . . ."

Whether or not the Governor takes this action it is clear that additional reforms to the state budget will be needed to help put the state back on a sustainable spending path.

Obama directs agencies to focus on performance

June 16, 2009 in Blog

With the threat from federal budget deficits growing each day, it appears the President is turning to the promise of performance-based budgeting as a solution.

Consider this June 11 memo to agency and department heads issued by President Obama's budget director Peter Orszag:

"Our goal is to build a transparent, high-performance government capable of addressing the challenges of the 21st century. The American people deserve a government that works, where the public interest is prioritized, where the impact of government spending is transparent and held to high, objective standards, and where results and good management matter . . . To be successful, we must focus resources on our highest national priorities, including investments in health reform!
, clean energy, and education. At the same time, we must enforce fiscal discipline, making sure that we invest in what works, do not waste taxpayer dollars on programs that do not work or are duplicative, and improve performance across the board."

One of the ways Orszag hopes to accomplish this is to focus agency attention on high-priority performance goals:

"Identification of agency high-priority performance goals is a first step toward developing the President’s agenda for building a high-performing government. There will be regular reviews of the progress agencies are making to improve performance in priority areas including problems they encountered and plans to address those problems. To prepare for these reviews, each agency is asked to identify a limited a number of high-priority goals and begin to define the strategies and means to achieve them . . . The agency goals identified for this !
purpose should generally have:
  • High direct value to the public or reflect achievement of key agency missions, as opposed to being focused on internal agency management or other administrative priorities.
  • Congressional authorization and appropriations required for successful implementation; though additional legislative changes may also be identified to contribute to success.
  • Coordination, operational, or other implementation challenges including across multiple agencies that once resolved, will likely lead to improved effectiveness or efficiency.
  • Performance outcomes which can be clearly evaluated, and are quantifiable and measureable in a timely fashion.
  • Significant challenges unlikely to be overcome without a concerted focus of agency resources."

Perhaps with an eye towards the spending problem in D.C., the memo goes on to direct agencies to prepare two alternative budget requests based on a freeze in spending and a five percent reduction.

Whether or not the President's proposed budget next year actually reflects this process, the information provided by agencies in response could prove to be invaluable for Congressional budget writers --- should they take the initiative to review it.

As we've previously recommended, Washington state lawmakers should also focus on agency performance when making budget decisions. Providing those who control the purse strings with this type of information allows them to make informed decisions on which purchases will deliver the highest results for taxpayers and those who rely on essential services.

Supreme Court orders Federal Way investigative report released

June 12, 2009 in Blog

So much for the wheels of justice turning slowly. Less than a week after hearing oral arguments, the State Supreme Court today ordered release of the findings of an investigation of Federal Way Municipal Court Judge Michael Morgan. The News Tribune (party in the case) explains the controversy in this editorial:

The fight over an investigation into the Federal Way Municipal Court could have broad implications for the public’s right to know everywhere in Washington.

Judge Michael Morgan is suing his own city and The News Tribune in an effort to keep a potentially embarrassing report under wraps.

The report, written by a Seattle attorney hired by the city, followed an allegation that the municipal court was a hostile workplace. The city was planning to release the document last year to The News Tribune m>, until Morgan intervened.

On Tuesday, he pleaded his case to the state Supreme Court, where it became evident that he is willing to try any legal theory to keep the report out of the public eye.

Morgan argues first that the record belongs to municipal court and therefore is not subject to the Public Records Act that governs executive-branch agencies.

He then goes on to assert that even if the record were subject to the public disclosure law, that the city has several excuses at its disposal for denying public access, among them attorney client privilege and employee privacy.

Judge Morgan is up for re-election in the August 18 primary. As a result The News Tribune asked the Court to expedite its ruling.

Obliging, the Court said today in its order:

"On June 9, 2!
009, this Court . . . heard oral arguments on whether the City!
of Federal Way should be restrained from releasing the Stephson Report --- a report written by Amy Stephson on her investigation into a Federal Way Municipal Court employee's hostile work environment claim --- in response to a public records request from The News Tribune. Because of the nature of this action, the Court has unanimously determined that the report be released immediately, with an opinion addressing this issue and other issues in the case to follow. Now, therefore, IT IS ORDERED that the stay issued by the Court of Appeals on April 15, 2008, preventing the City of Federal Way from releasing the Stephson Report is vacated. This is an interlocutory order which is not subject to a motion for reconsideration."

Pending the full ruling by the Court, this is a great development for open government.

State Auditor launches new website

June 11, 2009 in Blog

The State Auditor's Office launched a redesigned website today with many new features for citizens to stay informed on government accountability issues. As a frequent user of the past site, I'd like to congratulate the staff that worked on creating this vastly improved citizen resource!

According to the Auditor's press release:

“The redesigned site is another effort by our Office to promote government transparency and accountability,” Sonntag said. “The best way we can be accountable to citizens is to provide the results of our work in an easy-to-read and easy-to-find format.”

The site has new features for citizens, including electronic public records requests and a resource guide to help people find information they need from local, state and federal government agencies.

The site incorporat!
es RSS feeds so citizens can find out instantly when the Office posts reports or news to the site.

Governments and auditing professionals also have a new resource – an interactive best practices knowledge base through which auditors all over the world can share and search the best practices identified through audits.

Check out the Auditor's new and improved website here.