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On Wednesday, Kim Reynolds became Iowa’s first woman governor and the 43rd governor in the state’s history. She replaces longtime Gov. Terry Branstad, who resigned to become the U.S. Ambassador to China. Gov. Reynolds, who brings the total of women governors to six, has been Lt. Governor since 2011. Her four priorities will be tax reform, energy innovation, education and workforce training, according to yesterday’s article in the Des Moines Register. For Iowans who want to be see their new governor on a less formal occasion, here is a 2014 video of then Lt. Gov. Kim Reynolds accepting the ALS “Ice Bucket Challenge” from then Gov. Branstad. (In 2014, 17 million people took the “ice bucket challenge” and 2.5 million people donated $115 million to the ALS Association, a national non-profit organization that fights Amyotrophic lateral sclerosis, more commonly called Lou Gehrig’s Disease.)

Back in 2009, we suggested in a short Governing piece that it was okay to use public funds to buy flowers for a sick employee or an employee’s close relative. We thought the good will that came with the gesture paid a useful dividend to a public entity for a small price. We were bombarded by reader correspondence disagreeing. We’ve discovered over the years that both taxpayers and most state and local employees who contact us have a clear – almost puritanical – line that they draw when it comes to spending public money. While articles abound about wasteful spending, the limits on compensation, gifts, and extra perks are actually pretty tight. But the situation gets a lot fuzzier when contractors work with the public sector. There is a clear double standard here. In our experience, compensation and other spending decisions that would elicit fury in a government setting are often accepted for private contractors doing government work. We suspect that when flowers are sent to sick private sector employees doing public sector work, the gesture doesn’t elicit much criticism. The difference in expectations and practice was highlighted for us last weekend when we read the May 2017 audit of a quasi-governmental body that delivers managed care services in North Carolina. This case is particularly interesting because Cardinal Innovations Healthcare  was created by the North Carolina legislature as one of seven “Local Management Entity/Managed Care Organizations”. It’s responsible for delivering behavioral health care and substance abuse services in 20 counties, serving 850,000 individuals. One question that the audit explores: Is Cardinal a government entity or not? We’ll skip the details of the discussion. In short, the auditor makes a case that as a “local management entity” Cardinal Innovations should more closely follow government rules. Its “unreasonable spending,” the audit says, “could erode public trust.” The spending that’s described goes well beyond flowers. As of July 1, 2016, the entity’s Chief Executive Officer was paid a $635,000 annual salary. In the audit, Cardinal was criticized for holding lavish Christmas parties, attending luxury hotel retreats, using chartered flights for travel, and allowing questionable credit card expenses. One Christmas party in FY2016 included 75 attendees, at a cost of $242 each. Adding fuel to the auditor’s complaints is the fact that based on the per capita rates for each Medicaid individual served, Cardinal was able to save $70 million in FY2015 and FY2016. That’s the difference, the audit explains, between the amount of state and federal Medicaid money received by Cardinal and the amount paid out in its spending on Medicaid claims. In its response to the audit, Cardinal Innovations argues that it has been adhering to government rules. It says it is a “local government entity” as well as a Managed Care Organization (MCO) and a contractor to the state. It adheres, it says, to North Carolina’s Open Meetings Law, the Public Records Act and the Local Government Budget Control Act. On the other hand, it argues that its spending is in line with what is required of a contractor and MCO that needs to keep a board of directors engaged and needs to compete with private sector companies. It defends compensation practices that are needed to offer “competitive salaries to attract and retain talented professionals.” Of course the specifics of this case may not be precisely paralleled elsewhere. But the question of a public sector vs. private sector double-standard on spending is well worth considering.

States vary tremendously in the health care benefits offered to retirees. These differences are nicely spelled out in a May 2017 brief on retiree health care from the National Association of State Retirement Administrators and the Center for State & Local Government Excellence. (Retiree health benefits are, by far, the major component of Other Post-Employment Benefits (OPEB). Here are five facts we pulled from the brief: 80 percent of states provide health insurance to retirees under the age of 65; 70 percent do for those over 65. (For Medicare-eligible retirees, state coverage is typically secondary.) Long-term liabilities for OPEB for the 50 states totaled about $626 billion in Fiscal Year 2015. Only 7 percent of those long-term liabilities are funded. The vast majority are paid for on a pay-as-you-go basis. The state that has, by far, the most assets set aside for OPEB funding is Ohio, which administers retiree health programs for nearly all public employees in the state. Its $17 billion in assets represent 40 percent of the 50-state total. (We know from our own research that Ohio’s strong performance, relative to other states, stems from decisions made to set aside funding, starting in the 1970s.) States vary tremendously in the size of their liabilities. Ten states bear about 77 percent of total OPEB unfunded liabilities. They are New Jersey, Texas, New York, California, Illinois, North Carolina, Connecticut, Pennsylvania, Florida and Massachusetts. States spent about $18 billion on retiree health care costs in Fiscal Year 2015. This represented about 1.4 percent of state spending (excluding federal funds and bond funds). But the percentage varied greatly depending on the state. For New Jersey, OPEB costs were 5 percent of state spending. For slightly more than half the states, this category of spending represented less than 1 percent of the total. The NASRA brief focuses on the cost of retiree health, the extent of state liabilities, and the relatively modest effort at funding. It also provides some detail on the difference in approach used — whether states pay their retirees health premiums (or a portion of the premium); whether they make a fixed contribution or whether they allow retirees to be part of their state insurance pool. This last option, which is generally the least costly for states, means that retirees have an “implicit subsidy” because they are included in a plan with younger, healthier individuals. For more information on the benefit side, we recommend a report on funding trends and plan provisions, published a year ago by the State Health Care Spending Project, an initiative of the Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation.

Recruiting millennials and Gen Z to government requires lots of creativity. As we’ve written in Governing, non-profits often look more appealing than city jobs to younger workers. There are multiple reasons. Some experts talk about disillusionment with government, stodgy and rigid hiring practices or even uncertainty about how to apply. There’s another important reason. Many young people have no idea of the vast variety of jobs in city, county and state government. “There are a lot of things we do that people don’t know about. They don’t know how it benefits the community,” says Robert Neiuber, human resources director for the City of Rancho Cucamonga, CA, near the San Gabriel mountains in San Bernardino County. His city has tackled this problem with a series of videos to show the variety of city jobs. Here’s one we particularly like, with arborist Lucas Mitchell talking about his job, while sitting in a tree. The next video, gives a sense of what life is like for Jodi Silsbee and Gary Ablard, two Rancho Cucamonga employees who work in Community Services, Cultural Arts.

Our most recent Governing column looked at growing efforts to increase diversity in the workforce. Local governments and states increasingly work to make sure that their employees mirror the population and many have been successful. But there are far fewer governments that have achieved balanced representation in the top layers of management and salary. King County has been setting aggressive goals for that top layer. It already has a workforce that generally mirrors the community, says Matias Valenzuela, director of the office of equity and social justice. Now, its aim is to also achieve diversity in its management leadership and staff. Here are some of the steps it has taken to get to that point. Reaching out to employees. Several years ago, the county started engaging employees in the discussion. Managers tapped about 700 employees for conversations about their workplace experiences. They used these conversations to target the “systems, structures and barriers that are inequitable” within the organization, says Valenzuela. Developing a strong measurement component. A 2016-2022 strategic plan outlined an HR roadmap for King County’s departments and agencies. The county built a better measurement system and it committed to publicly report on how departments are doing at meeting objectives. Eliminating practices that screen people out.  “We’ve looked at our processes to see how we screen out people of color because of bias,” says Valenzuela.   One example is to de-emphasize degree achievement and emphasize instead the skills or competencies needed to do a good job. Increasing awareness of implicit bias. Valenzuela shared with us the training video that the county uses to help interviewers see their unconscious biases. The video emphasizes that interviewers can make judgments they’re not even aware of. They may favor someone who went to the same university as they did or who grew up in the same neighborhood. The basic message of the video, which is nicely done, is that “small biased judgments have a cumulative effect”. But the effects of unconscious bias diminish with greater awareness.  “Simply having the intention to evaluate candidates fairly and accurately can reverse the effects of bias,” the video concludes. It points to this Harvard website on implicit bias for more information.

We read lots of audits from state and local governments. These audits cover multiple governments and topics as diverse as children’s health, police-community relations, building construction, wastewater, tree maintenance, public pool safety, park management, contract oversight, etc. We find that whatever the topic, a number of the same audit complaints emerge. Poor inventory control. A couple of years ago, we focused one of our Governing columns on this issue in a piece titled “How Does a City Lose a Back Hoe?”. There has been no slowdown of  findings for audits on inventory weakness since then. For example, a Board of Regents audit of the University of Iowa athletic department this month found televisions, tablets, and  Apple watches “were either poorly tracked or not tracked at all,” according to an AP report last week. What’s more, the audit found that employees with state-purchased equipment routinely were permitted to keep the goods after leaving their jobs. Another inventory control problems that we’ve seen recently turned up in an Oklahoma County sheriff’s office audit where 3,041 of the 7,844 items listed in inventory records couldn’t be located, including pistols, shotguns and Tasers. Scary. Lax access to computers. Last week, a Maryland audit on the judiciary pointed out that monitoring of the court computer systems wasn’t sufficient to spot or prevent inappropriate activity by users who had no reason to have access.  “Numerous individuals were granted system access capabilities to the Judiciary’s financial management system, allowing them to unilaterally perform critical purchasing and/or payment functions,” it said. In April a Jacksonville, FL, audit of workers compensation had a similar criticism, noting that “A number of users” had “inappropriate access rights to the workers compensation claim administration system.” One danger? Users who had the ability “to issue an unlimited number of checks through the system for unlimited amounts.” Poor quality data. We could go on and on. About two years ago, we wrote a cover story for Governing about bad data, looking at the constant complaints from auditors’ offices about a wide variety of data issues. Problems included inconsistent definitions, sloppy data collection, incomplete data and wild guesses posing as data. A few more recent audit examples: In April, a Kansas audit cited numerous data problems, including out-of-date information on licensed foster homes, and a lack of adequate information about physical and mental health needs of children. It also reported that a high percentage of children were placed more than 100 miles away from their original homes, although closer placements may have been available. “Disparate data systems maintained by the two contractors and the child placing agencies may have contributed to long-distance placements,” the audit said. Late last year, an Illinois audit criticized the accuracy and completeness of child placement data from the Department of Children and Family Services and a Nevada audit of the Office of the Military questioned the accuracy of performance measurement data. Also worth mentioning is California’s biennial rundown of data problems it encounters in its auditing work. The most recent version of this report came out in September. (One example from that report: its finding that 11,000 employee records in the state’s leave accounting system had errors.)

We maintain a list of approximately 200 blogs, webpages and newsletters that we periodically visit to cull new and interesting insights and information about state and local government. Our favorites change over time and we often find new additions to our reading list. We also mourn blogs and websites that have disappeared. (Saddest departure for us was “The Thicket”, the wonderful blog managed and often written by Karl Kurtz at the National Conference of State Legislatures. His 2013 farewell post includes a list of the most popular Thicket stories.) Here are five blogs, newsletters and websites that are currently among our very favorites. None of these are products of governments themselves. We have a separate list for those. The London School of Economics, U.S. Centre blog. This pulls posts from a variety of U.S. and international sources. We often find interesting book reviews, and good explanations of the intricacies of U.S. government – for example, the recent post from “The Policy Space” in Australia explaining the differences between Medicaid and Medicare. It’s currently posting about three new pieces a week. There’s also a media center, called The Ballpark, with five video “explainers “about U.S. government and politics (all posted before the 2016 election) and new podcasts at the end of each month. GovLab includes a blog, digest and other features and is based at the NYU Tandon School of Engineering. Its constant flow of information provides the latest news and summaries on open data and technological innovation. Lots of good ideas come from other parts of the world, but there’s also some focus on what’s going on in local U.S. governments. Bibliographies on tech topics – for example, most recently on blockchain technology – provide very helpful reading selections. Posts are sometimes a little technical for our non-technical tastes, but we always learn something new. We also like the GovLab index, which provides different loosely related chains of statistics (in the Manner of The Harper’s Index) for topics like criminal justice. The School of Government blogs at the University of North Carolina, Chapel Hill, covers a number of topics including community and economic development, death and taxes, human capital and public leadership. The most prolific of the School of Government blogs focus on the law, both civil and criminal. Recently, we’ve read posts on how jail discipline is regulated, a post about the decline in capital cases, and a research review about crowdsourcing in local government. (We admit to some prejudices in favor of UNC, as our son, Ben Greene and our daughter-in-law, Madeline Walter, are alumni.) The Week That Was summary by Frank Shafroth. This weekly newsletter from the George Mason University Municipal Sustainability Project is currently running a bit behind. As of yesterday, the most recent weekly report was from April 28th. Normally Shafroth’s excellent weekly summary comes out on Fridays and provides a great rundown of what’s happened in budget and finance at the federal, state and local levels. Also, there’s lots of regular reporting on infrastructure spending, the sharing economy and a variety of new studies and evaluations. We just wish he and his team (there must be a team otherwise this weekly masterpiece would be impossible to produce) would use more paragraphing. Factcheck.org. This is more federal than state and local, but useful in helping us separate truth from fiction in government/political reporting and a valuable assist to us for alerts to family and friends on Internet rumors that they shouldn’t believe. Lots of coverage lately about the ACA and the efforts to replace it. Bonus blog: Futility Closet. This is not focused on state and local government or policy, but it is lots of fun to read. We often pick up quotes and ideas, and are entertained by the endless stream of fascinating historical tidbits, anagrams, etc. Did you know, for example, that French Revolution is an anagram of Violence Run Forth. Or that Aldous Huxley was George Orwell’s French teacher? We even find a few instances each month in which an entry connects to our city/county/state interests. For example, we learned recently why there is a statue of Lenin in Seattle.

Normally, everything we write comes from both of us. But New York State insists on seeing us as two separate individuals. As a result, the following citizen’s experience was written by Katherine. By the way, contrary to the anecdote with which this post begins, this is a happy little story. *** This month my driver’s license expired. This would not be a big deal, but I carry considerable emotional baggage based on my first trip to the NY Motor Vehicles Bureau office when I was 22 years old. I had all the proper forms. I had my learner’s permit. I had a No. 2 sharpened pencil in case anything new had to be filled out. There was one item I neglected to bring. A package of tissues. Here’s the story: When I arrived at the Department of Motor Vehicles, I was prepared for a moderately unpleasant experience. That was the reputation the DMV in New York and elsewhere,  had at the time. But the level of frustration exceeded all humane bounds; kind of like anticipating a lot of traffic on the road, and winding up in a 14-car collision. My pain began with a four-hour wait in line. That would have been bad enough, but when I triumphantly reached the head of the line, I was rudely told that I had been in the wrong line. I took two totally futile steps. First I broke my number two pencil in half. And then I began to weep. That’s where the tissues would have come in handy. Meanwhile,  I marched to another line, where I slowly progressed for another four hours. My day was shot. Flash forward a few decades. The process of getting my license renewed just took approximately seven minutes online (not counting a ten minute walk to a local pharmacy for my vision test.) Three minutes later, I received a confirmation that the transaction was complete. I was able to download a temporary license immediately. This process was so smooth, so simple and so efficient that I felt I had to give New York State some credit for a public service that is unrecognizable and infinitely superior to what it used to be. Good job, New York.

Do efforts to cut down on administrative costs in education, make life harder for teachers? An excellent report from the Morrison Institute for Public Policy at Arizona State University takes an in-depth look at the ongoing teacher hiring and retention crisis in that state. Adjusted for inflation, pay is down substantially and step increases, which were reduced during the recession, have not been adjusted upwards sufficiently since then. Between 2013 and 2016, 42 percent of teachers left after three years or less of starting to teach. The parallel statistic for charter schools was 52 percent. One clear tension in Arizona and elsewhere is that teacher workload has increased, while salary buying power has dropped. The drive for increased accountability has contributed to the increased workload. But another reason may be the reduction in administrative positions. A mom-and-apple-pie solution for more effective education spending is to shift administrative dollars to classroom spending. Spending more in the classroom sounds swell, but the report from Morrison makes it clear a higher percent of spending devoted to the classroom means a higher workload for teachers. Here’s what the report says: “Efforts to move money into the classroom from administrative and support services may have the unintended effect of increasing the workload on teachers. If an assistant principal in charge of tracking attendance is let go so that his salary can go directly to classroom expense, his duties will likely get parceled out to teachers, further increasing their workload as they now fill out attendance reports. Similarly, removing librarians from the system may transfer their duties to classroom teachers.” The chart below makes it clear how much workload and pay contribute to the teacher exodus in Arizona. A lack of political support for education and problems with administration stand out as well.

Back in January of 2013, the City of Seattle first contemplated a new $43 million customer care and billing information technology system for its two utilities, Seattle City Lights and Seattle Public Utilities. By the project’s launch a year later, the scope had expanded and the cost had grown to $66 million. Currently, the final budget for the New Customer Information System (NCIS) is $109 million. The time to complete also stretched from the originaly estimated 21 month schedule in January 2014 to 32 months in the real world. The Seattle City Council turned to the Seattle Office of City Auditor to find out why project cost and schedule grew and why council members weren’t informed along the way. The NCIS audit, which was released in April, is a great primer for any government official who is involved in managing an IT project. Many of its findings are familiar to us, as they recur in reports and audits about project management. In our view, the most universally applicable points made in this audit can be summed up in these four statements: The initial schedule was unrealistic. The audit details the drive to establish an aggressive timeline “to save costs.” This meant reducing the projected schedule by three months from the 2013 estimate, even though the project’s scope had risen significantly by its launch in January 2014. Nearly all the cost overrun came from additional labor costs when the project timeline subsequently grew by 11 more months. Elected leaders were not thoroughly informed about the frailty of original cost estimates. In a complex IT project, there is always shakiness in initial project estimates, this “cone of uncertainty” grows even bigger when two separate departments and multiple applications are involved, as was the case here. There were also limited procedures in place to inform the Council when the budget and timeline started to grow. Important risk factors were identified, but not addressed in a timely way. The audit describes the work of a well-respected Quality Assurance expert, who was part of the project team, and identified 10 high risks for the project, including a workload that was too high for existing staff and resources. According to the audit, meeting minutes for the project’s Executive Steering Committee show that the workload issue was brought up in August of 2014 and in 13 subsequent meeting reports. But actions never sufficiently addressed that problem. As the QA expert wrote in a May 2015 report, “this issue has been the root cause for slippage in many other areas of the project and is the primary driver for the decision to re-plan the Go-Live date.” Initial training of project staff was insufficient. As the audit says, “some City team leads had little or no project management experience or experience with implementing a new IT system, let alone one of this scale. While City IT staff were provided with some training, it focused primarily on an overview of new software applications.”

As we’ve mentioned in recent columns and posts, state and local governments are increasingly facing competition with the private sector and nonprofits when they try to recruit new employees. It doesn’t help that many young people are cynical about government, perceiving it to be bureaucratic, stodgy and slow paced. Local and state governments are fighting this image with videos that show the wide range of jobs and (especially) the potential for satisfying work. We periodically want to highlight recruiting videos that we think are effective. Our thanks, once again, to the Alliance for Innovation, for suggesting the two we’ve provided below. The first is from Ontario, California. The second is from Fort Lauderdale, Florida.

There’s been a big — and to us, unpleasant — change in the atmosphere that hovers over the 50 states over the last 25 years or so. Potentially divisive emphasis on politics has been on the ascendency. And we don’t see that as helping create more successful programs or better citizen services. A little background is in order. Our first major inroad into the state and local government field came with the creation of our “grading the states” efforts at Financial World magazine, which morphed into the far more exhaustive, thorough and academically grounded work on the Government Performance Project, which was featured in Governing Magazine. The effort was to evaluate the management capacity of the fifty states in human resources, finance, infrastructure and so on.  There was very little mention of politics in any of this work. And subsequently, we’ve concentrated our efforts on management and policy, not politics. When we started we were able to take pride in the fact that we frequently didn’t know whether the various state governors were Democratic or Republican. That didn’t seem germane to discussions of management. Others may have drawn correlations between our work and a political analysis, but we never found it necessary to do so. Slowly, but surely, times have changed. No longer can you avoid political divisions and their impact on policy in particular, and management to a lesser degree. No matter how black and white our evidence-based research may seem to be, there’s generally an overcast of red and blue. For instance, while the decision to accept Medicaid expansion funds under the Affordable Care Act should have been based on policy and fiscal management-oriented factors, it turned out that the vast majority of the red states rejected the federal dollars and the majority of the blue states went in the other direction. Along with a few others, Governor John Kasich of Ohio broke ranks with the Republican states, and was regarded as a maverick by many. We guess this is the way of the world. And things are still nowhere near as oriented to partisanship as the federal government. But still, we miss the old days.