Download - One cites the Arkansas Game & Fish Commission. Melissa ...arkansaspolicyfoundation.org/EFFICIENCY PROJECT.docx · Web viewThe author wishes to thank Arkansas Gov. Asa Hutchinson,

Arkansas Efficiency Project

ARKANSAS POLICYFOUNDATIONGreater Opportunity Through Innovative Change

Author's Acknowledgement Page

The author wishes to thank the Policy Foundation Board members whose dedication, support and loyalty made the Efficiency Project possible: Dr. Glenn Davis; George Dunklin, Jr.; Donald Fitz; Gregory Hartz; Blant Hurt; Dorothy Morris; Madison Murphy; Dr. Wendell Pahls; Bob Ratchford; and Will Rockefeller.

Scott and Marshall Harmon are extraordinary volunteers engaged in citizenship.

The author wishes to thank Arkansas Gov. Asa Hutchinson, whose vision made the Efficiency Project possible.

The cooperation of the following Arkansas state government officials has been essential to the Efficiency Project: Lt. Gov. Tim Griffin; (Executive Branch) Vu Ritchie; (Aeronautics) Jerry Chism; (Agriculture) Wes Ward; (Arkansas Heritage) Stacy Hurst, Rebecca Burkes; (Assessment Coordination) Bear Chaney, John Nichols; (Career Education) Charisse Childers; (Community Correction) Sheila Sharp; (Correction) Mike Carraway; Tiffanye Compton; (Economic Development) Mike Preston, Betty Anderson; (Education) Johnny Key, Susan Harriman; (Emergency Management) Tina Owens; (Environmental Quality) Becky Keogh; Timothy Cain; (Finance & Administration) Larry Walther; Timothy Leathers; Duncan Baird; Jake Bleed; Walter Anger; (Health) Ann Purvis; (Higher Education) Nichole Abernathy; (Highway & Transportation) Randy Ort; (Insurance) Allen W. Kerr, Russ Galbraith; (Labor) Leon Jones, Jr.; Ms. Veronica Alexander; (National Guard) Major General Mark H. Berry; Col. Don Mabry; (Parks & Tourism) Kane Webb; Kris Richardson; (State Bank) Candace A. Franks; Susannah Marshall; (Veterans Affairs) Karen Watkins; (Workforce Services) Daryl E. Bassett; Dorothy Tilley; and Anita Chance.

The author is solely responsible for any errors or omissions.

Author: Greg Kaza, M.S.F.

Introduction

The economic literature includes numerous references to efficiency.1 Posner (2007) notes a foundational claim of law and economics is "the common law tends to the promotion of economic efficiency."2 The Arkansas Constitution (Article 14) also uses the word "efficient" in terms of the public education system:

"Intelligence and virtue being the safeguards of liberty and the bulwark of a free and good government, the State shall ever maintain a general, suitable and efficient system of free public schools and shall adopt all suitable means to secure to the people the advantages and opportunities of education."

Efficiency is also a topic in non-academic publications. Governing magazine has published columns3 including several written by Harvard University researchers.4 One 2013 Governing explains, "(W)hat we once thought of as trade-offs -- "I can only do so much, so let's concentrate on the big items" -- is really a false choice." Harvard Kennedy School professor Steven Goldsmith observes:

"The right answer incorporates both: completely rebuilding some program budgets while transforming others through incremental efficiency improvements. Officials who force attention to harvesting small savings develop a culture intolerant of waste at any level, building a consciousness that every dollar spent comes out of someone else's pocket. A culture of efficiency induces changes throughout the governmental entity that not only build up to real money but also increase the likelihood of big ideas emerging from emboldened employees."

Goldsmith explains that through "partnerships and bottom-up initiatives, government can do more with less in ways that might have been impossible to push through without the mandate of lower tax revenues. As these small improvements set a new norm of constant reinvention, they will produce substantial savings and better services, culminating in better, faster, cheaper government."5

1 Examples include Chandra, Amitabh and Douglas Staiger. 2016. "Sources of Inefficiency in Healthcare and Education." American Economic Review, 106(5): 383-87; Kamada, Yuichiro and Fuhito Kojima. 2015. "Efficient Matching under Distributional Constraints: Theory and Applications." American Economic Review, 105(1): 67-99; and Hauner, David and Annette Kyobe, "Determinants of Government Efficiency." IMF Working Paper 08/228. The first abstract notes: "Healthcare and education exhibit wide variation in spending that is loosely associated with outcomes." The second notes, "Many real matching markets are subject to distributional constraints." The third is "the first examination of the determinants of government efficiency with a large country panel, building on a newly compiled dataset of scores of public sector performance and efficiency in education and health around the world."2 Posner, Richard A. 2007. Economic Analysis of Law (7th ed.) (New York) Aspen Publishing. 3 One cites the Arkansas Game & Fish Commission. Melissa Maynard reported, "States are increasingly offering more mobile apps to citizens in the hopes of connecting better with them and improving the efficiency of service delivery." May 23, 20134 Four appeared in Governing in 2016. Chieppo, Charles. "State Spending and the Search for Hidden Efficiencies" (February 2); Goldsmith, Steven. "Social Media's Place in Data-Smart Governance" (May 18); Goldsmith, Steven. "Infusing Government with a Data-Driven Culture" (May 26); Goldsmith, Steven and Jane Wiseman. "The Billions We're Wasting in Our Jails" (June 22).5 Goldsmith, Steven. 2013. "Building a Culture of Efficiency in Government." Governing (March 20)

Gov. Hutchinson's First Year Efficiency Initiatives

One common sense explanation of efficiency is that it involves doing more with less. Individual households and commercial enterprises face this challenge on a daily basis. Technological advances that generate productivity increases6 help meet this challenge. But can these increase efficiency within state government?

Elected officials in a democratic republic are not oblivious to this process. Officials answer to their constituents, and are responsible for the delivery of public services. One idea is that these outputs can be delivered in a more efficient manner using fewer inputs such as state employees and tax dollars.

Gov. Asa Hutchinson, after being sworn in as Arkansas' 46th chief executive in January 2015, ordered a hiring freeze7 in his first executive order. Gov. Hutchinson referred to efficiency in the order and in a statement:

"That a moratorium on hiring is necessary to promote the fiscal efficiency and financial integrity of the State of Arkansas."

"The executive orders8 I signed today will help provide that new perspective, which is critically important as we find new ways to make state government work more efficiently for all Arkansans."

Six months later, Gov. Hutchinson cited efficiency in a statement about the hiring freeze:

"We want to be good stewards of the taxpayers' money, and this is an example of carrying out that philosophy. My first act on my first day in office was to institute a hiring freeze so that we could be more efficient and prudent in how we staffed state government."9

Several state agencies were merged during the General Assembly's 2015 fiscal session. These were the Department of Rural Services and Science and Technology Authority into the Economic Development Commission; the Division of Land Survey into the Geographic Information Office; and the Building Authority into the Department of Finance and Administration.10 According to officials, a cultural change must occur within state government to increase efficiency. "This governor's aim is to inspire people to change," an official explained. "Every

6 Moore's Law explains this process. See Moore, Gordon E. 1965. "Cramming more components onto integrated circuits." Electronics (April 19). There are multiple examples but personal computers and smart phones are among the most prominent.7 Governing has described how governments have controlled their headcounts through attrition. See Eggers, William. 2013. "The Real Story of the State and Local Workforce." (August 14)8 Gov. Hutchinson signed a second executive order requiring a review of state agency rules and regulations prior to submission.9 Efficiency initiatives saved $2.5 million during the first six months of 2015.10 Savings were estimated at $10 million to $12 million over five years. Gov. Hutchinson termed mergers "efficiencies measures."

department has employees with ideas about improving efficiency. The challenge is getting them to come forward with ideas because not all of them will happen."11 Gov. Hutchinson Announces Efficiency Project

Gov. Hutchinson announced an Efficiency Project in December 2015 near the end of his first year, noting his interest in the topic and "a very willing leadership team (of) cabinet officials." He defined the challenge in two sentences:

"How can we best deliver services for the taxpayers in the most cost-efficient manner. That is the objective."

Gov. Hutchinson explained the objective is "not cost savings at any measure. It is effective delivery of services in the most cost-efficient manner."12

In announcing the Project, Gov. Hutchinson issued the following memorandum:

"As Governor of the State of Arkansas, I am committed to preserving and protecting the financial integrity of our state. Transparency, accountability, and efficiency promote the people's faith in good government. The citizens of Arkansas deserve a critical evaluation of their state government to ensure the cost-effective delivery of services and to ensure that state employees have every possible means necessary to maximize their effectiveness.

"The Arkansas Policy Foundation (the "Foundation") was established in 1995 as an independent research organization. It has conducted efficiency reviews of our state government using citizen volunteers, academics, and others with specialized knowledge in certain areas of interest that facilitate in the Foundation's research. The Foundation has established the Efficiency Project, which will review our state government in the upcoming months. The Efficiency Project is supported by some of Arkansas's leading business people and professionals, and it is charged with developing recommendations to streamline our state government in order to make it more cost-effective and citizen accountable. The Efficiency Project allows a nonpartisan, independent group of citizens to volunteer their time and efforts to directly impact the improvement of state government. Upon completion of its review, the Foundation will publicly report its findings and recommendations.

"In light of the foregoing, I hereby direct all directors of state offices, departments and agencies to assist the Foundation in its evaluation of our state government and in its development of recommendations to streamline state government and make it more cost-effective and citizen accountable. In facilitating with this necessary review of state government, each director shall designate one of his or

11 Interview with state employee, February 19, 201612 Gov. Asa Hutchinson public remarks, December 17, 2015

her employees to coordinate with the Foundation and to ensure that it receives all pertinent requested information pertaining to its review."13

13 "Gov. Hutchinson Memorandum, State Government Efficiency Project"

Methodology

Department Organizational Charts

The Project began the day after Gov. Hutchinson's announcement. Organizational charts were requested from designated contacts at each state agency. A high level of cooperation was encountered, and analysis of the charts concluded in early 1Q-2016.

Citizen Tip Line & Media Column

A citizen tip line was created on the Policy Foundation's home page after the charts were assembled. Talk Business published a column in 1Q-2016 that noted the Project "seeks to identify potential cost savings in state government with the help of citizens, state employees, analysts and other stakeholders committed to Arkansas' future."14 These steps produced numerous suggestions:

"As a business owner, I have seen the inefficiencies in the state's academic organizations' first hand."

The Employee Suggestion System is "an underutilized efficiency tool." (state employee comment)

"I suggest an easy way to lower cost in the process of collecting sales tax on new automobiles ... I have bought automobiles in other states ... in one ... the sales tax was collected by the dealer ... (this) eliminates a bad experience with government and would allow the Revenue department to employ fewer people. License plates could be mailed. The same strategy would apply for boats, recreational vehicles, etc."

Medical policies in neighboring states are "driving efficiencies and helping physicians serve patients" (medical professional).

"There aren't enough administrators with business experience." (state employee comment)

"They should standardize department organizational charts and have these on a website. Each chart should have the position and the person who fills that position with their contact information. If they are working for the people how would the people know who is in charge? My time in the Army taught me chain of command. If you don't know the structure of the chain a person would have a hard time knowing who to contact."

14 Kaza, Greg. 2016. "Government efficiency project seeks to identify cost savings" (March 16). The column noted earlier Arkansas initiatives : "Republican Winthrop Rockefeller (1967-1971) proposed a state government reorganization. His ideas advanced under his successor, Democrat Dale Bumpers (1971-75), according to the Encyclopedia of Arkansas. An entry notes, “Much of Rockefeller’s legislative agenda was adopted by Bumpers, including the plan to reorganize state government management from hundreds of disparate agencies into a small group of departments.” Bumpers’ entry notes, “He gained legislative approval of several major reforms that Rockefeller had championed but had been unable to convince the Democrat-controlled state legislature to enact.”

Other State Efficiency Projects

Simultaneously, the Efficiency Project reviewed recent efficiency initiatives in other states. The Project learned of three initiatives (Kansas, Louisiana, North Carolina) and placed information into the following memorandum:

"The following memo describes four efficiency projects conducted in three other states, and was based on interviews with project participants, public records, and media reports. The memo notes three projects cost between $2.8 million and $4.2 million each in tax dollars, while a fourth relied heavily on volunteers. One conclusion is that other research organizations have specialized knowledge. The Project should consider both factors to increase efficiencies and reduce costs.

North Carolina

"According to sources at several research organizations, Joseph Coletti served as deputy director of a recent efficiency project in North Carolina.15 The project was known as North Carolina Government Efficiency and Reform (NC GEAR). Prior to this role, Mr. Coletti served as an analyst for the John Locke Foundation, a North Carolina research group affiliated with the State Policy Network (SPN).16

"Mr. Coletti advised in several interviews that North Carolina appropriated $4 million over a two-year period. The initial $3 million contract was with Deloitte & Touche, with "amendments totaling $1 million from other budget sources" for information technology and human resource projects. The original 25-page RFP is available. The NC GEAR project maintains a website at: http://ncgear.nc.gov/

"The site's homepage includes the original Request For Information (RFI) responses from national and local management consulting firms, a 241-page document. It also includes the interim report and summary, final report; and legislation creating the NC GEAR project. North Carolina news media reported widely on the project.

Louisiana

"Louisiana awarded $4.2 million to Manhattan-based Alvarez & Marsal to conduct a state government efficiency review. Following is a link to the press release announcing the project:

https://wwwprd.doa.louisiana.gov/doa/PressReleases/Govtl_Efficiencies_Mgmt_Suppt_Contract.htm

15 North Carolina undertook a similar broad efficiency review in 1992.16 The Policy Foundation has been an SPN member since 1995.

"The final report was released in mid-2014, and produced 72 recommendations that were estimated to generate $2.7 billion in savings for the state over a five-year period.17

Kansas

"According to sources at several academic and research organizations, two initiatives also occurred in Kansas.

"The first initiative, conducted a decade ago, was a volunteer effort headed by a former private sector official. The project made several "general findings" about Kansas government:

Fragmented knowledge, fragmented systems, fragmented processes; No support for statewide/system-wide decision-making perspectives; and State personnel are an untapped source of creativity and passion.

"The second initiative, announced in October 2015, awarded $2.6 million to Alvarez & Marsal.18 The efficiency review is ongoing, though preliminary findings, released last week, estimate $2 billion in savings."19

The review of initiatives in other states led to the following conclusions:

The Arkansas Efficiency Project should strive to rely on private support and volunteers to save tax dollars, reduce costs, and provide a contrast with initiatives in other states;

A shortage of analysts with specialized knowledge exists in Arkansas. The Efficiency Project should retain a management consulting firm;

The Efficiency Project should encourage analysts affiliated with instate and outstate research organizations to participate on a volunteer basis to reduce costs and provide specialized knowledge; and

The Kansas finding that state personnel are "an untapped source of creativity and passion" is highly relevant. The Efficiency Project should learn from this initiative by emphasizing "decentralized decision-making with accountability" as a guiding principle, while encouraging improved collaboration across silos that exist within Arkansas state government.

17 Following is one Louisiana media account: http://theadvocate.com/home/9351628-125/report-offers-27-billion-in18 http://www2.ljworld.com/news/2015/oct/06/kansas-inks-efficiency-study-26m/19 http://ksn.com/2016/01/12/firm-says-its-proposals-would-save-kansas-2b-over-6-years/

Involvement of Other Research Organizations

Analysts affiliated with instate and outstate research organizations participated on a volunteer basis to reduce Project costs and provide specialized knowledge

The Arkansas Efficiency Project was a large venture for a state-based research organization. The Policy Foundation has working relationships with national think tanks with specialized knowledge. These include the California-based Reason Foundation, which maintains a state-by-state privatization inventory; and the Pew Charitable Trusts in Philadelphia, which analyzes corrections at the state level. The Policy Foundation also relied on scholars within the University of Arkansas system who have published peer-reviewed research.

The Efficiency Project's objective was explained in a sentence:

"The Project seeks to identify cost savings from efficiency reforms such as consolidation and privatization."

Precedent for the Efficiency Project was explained in a paragraph:

"Consolidation and privatization have occurred to a limited extent in Arkansas. Restructuring or consolidation has occurred in nearly 70 school districts since the Lake View school finance decision. The merger of the Arkansas State Police and Arkansas Public Employees retirement systems (2009) is another example. The General Assembly enacted an educational voucher program, (PA 1178) in the 2015 session. The program will be administered by the state Department of Education, and serve students with disabilities and the children of active-duty military. In August 2015, the state Department of Health announced it would privatize its in-home services program. Arkansas Gov. Asa Hutchinson noted, "This is an example of a government program that is no longer sustainable and can be ended because the private sector has stepped in to meet demand."

This report includes references to research conducted by these organizations.

Departmental Questionnaires

The Policy Foundation distributed a two-page questionnaire to agency contacts in 1Q-2016. The questionnaires asked agencies to respond to seven questions:

How does your department define efficiency? Are performance measures used to define efficiency? If so, please

describe. The state of Arkansas maintains an employee suggestion system.

Information is posted at a link on the DFA website. How many suggestions were made about your department in the previous year? Did any involve the concept of efficiency?

Does your department identify its customer base? Please describe the five largest departmental programs (budgetary

amount) and the step-by-step processes used to deliver these programs. Describe the five largest departmental programs (customer utilization)

and the step-by-step processes used to deliver these programs. Please describe any recent department initiatives to improve efficiency.

Twenty-one (21) executive branch20 agencies were included in the review:

Arkansas Agriculture Department Arkansas Assessment Coordination Department Arkansas Department of Aeronautics Arkansas Department of Career Education Arkansas Department of Community Correction Arkansas Department of Correction Arkansas Department of Education Arkansas Department of Emergency Management Arkansas Department of Environmental Quality Arkansas Department of Finance and Administration Arkansas Department of Health Arkansas Department of Higher Education Arkansas Department of Labor Arkansas Department of Parks and Tourism Arkansas Department of Veterans Affairs Arkansas Department of Workforce Services Arkansas Economic Development Commission Arkansas Insurance Department Arkansas Military Department/National Guard Department of Arkansas Heritage State Bank Department

A high level of cooperation was encountered, and answers to the questionnaires were assembled in 2Q-2016. They are presented elsewhere in this report.

20 The Arkansas State Highway and Transportation Department voluntarily offered to complete the questionnaire.

Interviews with Department Officials

The Policy Foundation conducted interviews with department officials and senior staff when deemed necessary. Interviews were conducted in-person or via telephone in 2Q and 3Q-2016. A high level of cooperation was encountered, and the interviews underscored the idea that state personnel are "an untapped source of creativity and passion."

Arkansas Department of Finance and Administration

The Arkansas Department of Finance and Administration was crucial to the Efficiency Project. DFA senior staff provided data for analysis of total operational expenditures, full-time employees (FTEs) and other agency metrics.21

Agency Summaries

Agency summaries and recommendations were discussed with staff in 3Q-2016.

Limitations

Arkansas has more than 500 separate state government entities, according to records. Due to limited volunteer resources, the Efficiency Project was only able to review 20 of the largest state agencies.

The Arkansas Department of Human Services was not part of the review. Lt. Gov. Tim Griffin conducted a review of the department in 1Q-2016.22

Privatization comparisons were limited to the 12-state southeast region23 and were not national in scope.

Total operational expenditures in data posted on a DFA site may not fully explain the fiscal impact of "pass-through" funding at some agencies.

21 Budget manuals prepared by the DFA for state agencies were part of this process. Each agency has statutory authority listed, an agency history, and a departmental appropriation summary. State agency total operational expenditures are also listed. http://www.dfa.arkansas.gov/offices/budget/Pages/budgetRequestManuals.aspx22 Lt. Gov. Griffin's recommendations are posted at: http://ltgovernor.arkansas.gov/news/detail/griffin-recommends-bold-innovative-and-comprehensive-reorganization-of-dhs23 Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia.

http://www.dfa.arkansas.gov/offices/budget/Pages/budgetRequestManuals.aspx

Summary of Findings

The following chart summarizes agency responses to the questionnaire.

Mission Statement cites efficiency?

4 Yes, 17 No

Strategic plan posted with efficiency reference?24

6 Yes, 15 No

Spending greater than CPI?25

11 No, 9 Yes, 1 similar

Performance measures?26 All 21 agencies

Customer base defined?27 All 21 agencies

Efficiencies in states in region?28

6 Yes, 13 No, 1 varies

Department-identified efficiencies? All 21 agencies

Total number of department-identified efficiencies?

18429

Total dollar amount from department-identified efficiencies?

$7.3 million-to-$13.5 million

24 The Arkansas State Highway and Transportation Department (AHTD) includes a reference to efficiency in its mission statement, and has a strategic plan that cites efficiency. http://www.arkansashighways.com/about/strategic_plan.aspx25 Arkansas revenues are cyclical, i.e., they tend to contract around periods of recession and grow in expansions. Revenues declined around the 2001 recession, leading policymakers to impose a temporary tax increase that was later rescinded. The National Bureau of Economic Research's Business Cycle Dating Committee is the arbiter of cyclical turns in the U.S. economy. The last recession occurred between December 2007 and June 2009. The Consumer Price Index increased 9% from 2009 to 2015.26 AHTD uses various performance measures including Administrative Costs per Mile. The department has an Efficiency Evaluation Committee that is currently reviewing past efforts at improving efficiency. AHTD response to questionnaire27 AHTD includes "those who pay for the state highway system" among its customer base.28 Have other states in the southeast region used efficiency initiatives such as privatization to reduce costs? Data for other states was compared to Arkansas. Six states in the region used privatization to deliver public services in the same area as the agency.29 Does not include four efficiencies identified by AHTD in response to a questionnaire: 1) E-Construction (2016); 2) Equipment Lease/Purchase Pilot Program (2016); 3) Workforce Management (Timekeeping and Hiring Management) (2012 & 2014); 4) Network Fleet Equipment Diagnostic and Monitoring System (2012).

Recommendations

The Efficiency Project makes 60 policy recommendations that will save Arkansas taxpayers more than $50 million.

The first 20 recommendations will advance a culture of efficiency within Arkansas state government:

1) Mission Statements. Agency officials expressed support for efficiency as a concept, though few mission statements include the term. Each agency should include the word efficiency in their mission statement and post it online in an easily accessible format.

2) Overall State Strategic Plan. A statewide strategic plan is critical to align state budgets and operations.

3) Agency Strategic Plans. Only five state agencies post a strategic plan. This culture runs counter to a Government Finance Officers Association recommendation that "all government entities use some form of strategic planning to provide a long-term perspective for service delivery and budgeting, thus establishing logical links between authorized spending and broad organizational goals."30 Each agency should have a strategic plan and post it online so it is accessible to citizens.

4) Efficiency Section. Each strategic plan should include a section explaining how the agency will advance efficiency.

5) CPI-Expenditures Link. A short-term budgetary link should be established between the Consumer Price Index (CPI)31 and total operational expenditures by agencies.

6) Performance Measures. All agency performance measures should be quantifiable.

30 http://www.gfoa.org/establishment-strategic-plans31 CPI data is available from the Federal Reserve System. Alternative metrics include growth in Arkansas per capita disposable personal income and median household income. These are reported by the U.S. Bureau of Economic Analysis and U.S. Census Bureau. The practical effect of a CPI-Expenditures link is that it incentivizes officials to search for efficiencies in a low-inflation environment, though an argument for equity can also be made: state government should not spend at a percentage rate greater than growth in Arkansas household income. The goal is not unrealistic: total operational expenditures declined at 13 Arkansas agencies between FY 2014 and FY 2015. These were: Assessment Coordination ($17,453,295 to 17,430,818); Career Education ($147,692,230 to $136,641,334); Community Correction ($90,637,133 to $89,680,879); Economic Development ($87,006,519 to $45,589,380); Emergency Management ($53,574,202 to $39,812,016); Health ($370,701,506 to $370,387,770); Heritage ($20,348,799 to $18,165,321); Higher Education ($17,674,754 to $13,066,990); Insurance ($72,444,979 to $57,736,238); Labor ($6,544,604 to $6,486,450); State Bank ($8,215,813 to $7,693,381); Veterans Affairs ($12,845,755 to $11,605,581); and Workforce Services ($518,335,925 to $460,258,462).

7) Taxpayers as Customers. Taxpayers should be formally recognized as part of the customer base of each agency. Several departments currently recognize taxpayers in such a manner.

8) Publicize Employee Suggestion System. The program was established to incentive state employees to make suggestions; yet records and agency responses to the questionnaire show few employees participate. There is anecdotal evidence that employees do not understand the program or its potential to identify additional efficiencies.

9) Incentivize State Employees. Compensation was a recurring theme during interviews. Some departments have voluntarily eliminated positions, and are operating with fewer employees. Remaining employees should be eligible for increased compensation if they are productive32, and the agency returns savings.

10) Incentivize Cross-Agency Collaboration. Silos were a recurring theme during interviews. Agencies should be incentivized to collaborate and share strategies.

11) Identify Internal and External Silos. Silos should be identified within agencies as self-imposed (internal) or external.

12) Employee workshops. The Efficiency Project should be explained to state employees in workshops or meetings.

13) Senior staff briefings. Senior agency staff should be briefed on efficiency initiatives in Arkansas and other states.

14) Privatization inventory. Interviews revealed privatization is being used by some agencies to drive efficiencies, though this action is not always recognized. An inventory should be created for purposes of reducing external silos.

15) Privatization as a management strategy. Privatization describes the process whereby nonprofit or private sector units perform functions previously provided by a public sector unit. Several types of privatization are:

Contracting out: a nonprofit or private sector unit provides services under contract with a public sector unit.

Franchising: a nonprofit or private sector unit is given a specific marketplace or territory by a public sector unit.

Shedding: a public sector unit sells its assets or services which are then undertaken by one or more nonprofit or private sector units.

32 AHTD's Achieving Career Excellence Program (ACE) (implementation beginning in April 2016) uses a "Performance, Learning, and Compensation Management System that centers on employee performance evaluations, goal setting, training opportunities, and performance-based pay. The goal is to promote a positive, productive, and career-focused work environment that will result in lower employee turnover and compensation tied to performance." Performance-based pay is an example of an incentive.

Vouchers: a government provides a voucher that allows consumers to choose services from competing nonprofit, private or public sector units.

Employee Stock Ownership Plans (ESOPs): employees of a public sector unit provide services to consumers as a non-profit or private sector unit.

Senior staff and interested employees should be briefed on these strategies.

16) Other Management Strategy: Lean Six Sigma. Lean Six Sigma is a management strategy that seeks to eliminate waste. One agency has successfully used the strategy. Senior staff should be briefed on this agency's efforts.

17) Other Management Strategy: Theory of Constraints. TOC is a management strategy used by some state budget departments including Utah. Several employees expressed interest in TOC during interviews and should be encouraged to learn more about the strategy.

18) Other Strategies. Agency officials should be briefed on Pay for Success Contracts (also known as Social Impact Bonds) and Public Private Partnerships

19) Paperwork Reduction. Excessive paperwork was a recurring theme during interviews. The abundance of government red-tape is also a frequent complaint in the commercial world. Concerted efforts should be made to reduce paperwork requirements in both spheres.

20) Oversight Authority. Formal or informal oversight for these recommendations and others should rest with an individual or team that shall work in a collaborative manner with the executive branch to advance efficiencies.

Twenty-seven (27) recommendations are unique to specific agencies:33

21) Agriculture: Department-identified consolidation and restructuring initiatives should be encouraged.

22) Aeronautics: The department's self-described "K.I.S.S." method for managing grants should be shared with other state agencies.

23) Career Education: Public-Private Partnerships undertaken by other states in the region should be analyzed for their potential to reduce costs and increase efficiencies in Arkansas.

24) Community Corrections: A future Efficiency Review should identify efficiencies in states outside the region. The Review should focus on three of ACC's five largest program areas. These are: 1) Parole and Probation Field

33 These recommendations are included in agency sections.

Services; 2) Residential Community Correction Treatment Facilities; and 3) Reentry Programs.

25) Corrections: A future Efficiency Review should identify efficiencies in states outside the region, and focus on ADC's largest program areas in terms of budgetary size: Inmate Care and Custody; Farm; Industry; and Work Release.

26) Education: The department's performance measures are inadequate and must be strengthened.

27) Education: Legal guardians should be added to the customer base.

28) Education: Public-private partnerships have the potential to increase efficiencies within K-12 education.

29) Education: A future Efficiency Review should identify efficiencies in states outside the region.

30) Emergency Management: ADEM receives a high percentage of total operating funds from federal revenue sources, though these funds have declined significantly in recent years. It would be prudent to develop a contingency plan based on a scenario of further reductions in federal revenues.

31) Environmental Quality: ADEQ’s Complaints application, available for iOS and Android operating systems, should be studied by other state agencies to determine if other apps might advance efficiencies.

32) Environmental Quality: ADEQ's consolidation of its Melbourne and Batesville field offices, as well as the closing of its Jasper field office should be studied by other state agencies and adapted if economically feasible.

33) Finance and Administration: DFA interacts with and drives processes for a large proportion of Arkansas state government, including revenue and personnel management. The department should serve as a catalyst for advancing future efficiency initiatives within state government.

34) Finance and Administration: The relationship between taxpayers who pay their taxes in a timely manner and those who do not should be clarified by DFA.

35) Finance and Administration: The feasibility of consolidating revenue offices should undergo formal review. The review should include multi-year customer utilization data.

36) Finance and Administration: The collection of some outstanding accounts receivable should be privatized if the department is unable to reduce the net balance by 5%.

37) Health: A future Efficiency Review should identify efficiencies in states outside the region and focus on ADH's five largest program areas.

38) Higher Education: New strategies are needed to achieve Arkansas' ambitious post-secondary attainment goals. Public colleges and universities in other states have authority to sponsor charter schools. One reason for this idea is that students become aware of post-secondary options at an earlier age. Another is that the policy increases competition within the educational sector. The department should encourage this innovation.

39) Parks and Tourism: The feasibility of shedding four state parks to non-state nonprofit and/or government units should undergo formal review. All are characterized by low multi-year customer utilization.

40) Veterans Affairs: Public-private partnerships have the potential to increase efficiencies at other state departments. ADVA's use of public-private partnerships should be recognized and explained to administrators at other state departments to reduce silos.

41) Workforce Services: DWS compiles Arkansas labor market information, and it should expand its monthly nonfarm payroll employment report to include private industry sectors engaged in coding and technology-related services. The information should be incorporated into economic development initiatives to reduce silos.

42) Economic Development Commission: AEDC returned unused funds last year, a commendable achievement. Employees should be eligible for performance bonuses as a future incentive.

43) Economic Development Commission: Nonfarm Payroll Employment growth should be adopted as a performance measure. Arkansas' employment growth should be measured against regional and national averages, with the goal of equaling or surpassing these measures on an annual and cyclical basis.

44) Military/National Guard: The agency is unique among state agencies in using a Lean Six Sigma process to advance efficiency. Lean Six Sigma is a management process that seeks to eliminate waste. Management of other state agencies would benefit from understanding this process.

45) Military/National Guard: Other state agencies should review the agency's performance measures.

46) Heritage: Performance measures should be strengthened in several agencies.

47) Heritage: Efficiency initiatives identified by the Heritage department are extensive and should be subjected to cost-benefit analysis when feasible.

Five recommendations address unintended economic consequences that waste scarce resources:

48) NSLA funding is distributed in an inefficient manner.

49) Facilities Partnership funding is distributed in an inefficient manner.

50) Certain funds are not being distributed to low-income K-12 school districts as originally intended.

51) The practice of paying for lower quality digital courses through one educational cooperative is inefficient.

52) Annual payments to legacy programs regardless of performance is inefficient.

Four recommendations address state practices:

53) Consolidation. State agencies are using consolidation to advance efficiencies. The practice should be applied to other governmental units including educational co-operatives.

54) Performance Pay. Some state agencies are using this strategy to advance efficiencies. The practice should be applied to other agencies.

55) Procurement. The state's procurement system should be analyzed for potential efficiencies.

56) Motor Vehicle Policy. Cost-benefit analysis can determine whether state employees should be reimbursed for driving their own vehicles or use state-owned or leased vehicles if they drive less than 10,000 miles annually.

One recommendation addresses citizenship:

57) Arkansas Grace Commission. A citizen panel to advance efficiencies in state government should be established with a two-year sunset clause.

Three recommendations are proactive to prevent future crises:

58) Negative Interest Rates and Discount Rates. Discount rates for public retirement systems should be adjusted downward given the prevalence of negative interest rates in today's financial environment.

59) Derivatives Transparency. Any Arkansas governmental unit using a derivative financial instrument should disclose its use.

60) Cyclical Early Warning System-State Revenues. Arkansas revenues are cyclical, i.e., they tend to contract around periods of recession and grow in

expansions. An early warning system that uses coincident economic indicators would assist budgetary policymakers.Arkansas Agriculture Department

Summary

Mission Statement cites efficiency? No34

Strategic plan posted with efficiency reference? No Spending greater than CPI? No Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes35

34 “The Arkansas Agriculture Department "is dedicated to the development and implementation of policies and programs for Arkansas agriculture and forestry to keep its Farmers and Ranchers competitive in national and international markets while ensuring safe food, fiber and forest products for the citizens of the state and nation." aad.arkansas.gov35 AAD identified 17 efficiencies in its response to a questionnaire: 1) The deputy director for aquaculture position was divided into two separate program manager positions to serve needed areas. This job realignment resulted in cost savings of approximately $25,000 per year; 2) The duties of the administrative specialist previously serving as an executive assistant for the deputy director of aquaculture were realigned to other needed areas when the position was vacated in 2015 (cost savings of approximately $17,500 per year); 3) Four human resource positions were moved under the Department from the Forestry Commission and the Plant Board. This has resulted in greater efficiency due to realigned workloads, better coordination of duties, and improved employee cross training; 4) Ten fiscal positions were moved under the Department from the three subordinate agencies (four from the Forestry Commission, four from the Plant Board, and two from the Livestock and Poultry Commission). This consolidation has improved the efficiency of timekeeping and budgeting staff and has allowed for increased cross training and realignment of job responsibilities; 5) In 2014 the Forestry Commission and Plant Board each surrendered a fiscal position to allow for the creation of a grants coordinator at the Forestry Commission. The position was realigned in 2015 to be the grants coordinator for the Department. The creation and realignment of the grants coordinator position has increased efficiency by improving grant reporting and compliance and allowing for timely and consistent reimbursement requests; 6) The consolidation of the mail room facilities of the Plant Board and Livestock and Poultry Commission (cost savings of approximately $11,000 in equipment purchases and approximately $3,000 in service and equipment fees); 7) The retirement of a long-term fiscal department employee provided an opportunity to fill that position at a lower salary (cost savings of $12,000); 8) The elimination of executive staff positions at the Livestock and Poultry Commission and Plant Board (cost savings of approximately $170,000 annually); 9) The Department is in the process of surrendering 19 budgeted vacant positions. The cost of budgeted but vacant positions comes at a cost of $420 per month per employee position– meaning that surrendering the 19 budgeted vacant positions would result in annual savings of $95,760. Surrendering these positions would reduce our total authorized positions from 590 to 571; 10) The Department is in the process of adding the Livestock and Poultry Commission employee's to the Plant Board's phone system (cost savings of approximately $15,000 per year). Furthermore, consolidation would allow the Department to eliminate a receptionist position (additional cost savings of $23,000 per year); 11) The Department conducted a thorough review of state vehicle usage and was able to reassign vehicles to needed areas and personnel (cost savings of at least $40,000 per year); 12) The Department is working towards consolidating additional employees at the main office on Natural Resource Drive which would promote operational efficiency (cost savings of $58,036 per year); 13) Historically, each Department sub-agency has maintained their own separate IT staff. The Department is currently consolidating IT staff which will result in standardized processes, sharing of resources, and additional efficiencies and cost-savings. The Department has identified the following potential changes to reduce costs and improve efficiency: 14) The development of a new combined lab to replace the aging and separate lab facilities of the Livestock and Poultry Commission, Plant Board, and Bureau of Standards would further promote operational efficiency and long-term cost savings while also improving the Department’s compliance with new laboratory standards and the retention of necessary national certifications and accreditations; 15) Due to each Department sub-agency existing as a stand-alone agency in the past each sub-agency has maintained their own separate policies. The Department is undergoing a review of existing policies and working towards the creation of a standardized policy handbook; 16) The Department is exploring the transition to an online format for all licensing and registration fees. Discussions are underway with companies

offering online registration services and other state agriculture departments that have transitioned to online licensing and registration. Discussions indicate increased efficiency and the possibility of eliminating at least one staff position after completion of the transition for a $25,300 savings as well as the potential for cost savings of $71,000 annually in the area of pesticide product registration; 17) The Plant Board anticipates a reclassification of a position and the consolidation of two senior positions (cost savings of approximately $100,000)."

Dollar amount from identified efficiencies? $608,660

Use of tax dollars. Total operating expenditures at the Arkansas Agriculture Department (AAD) declined in the period under review. The following chart shows funding by source:36

FY 2009 FY 2015

General Revenue $16,660,063 $18,600,307Special Revenue $18,045,861 $21,659,986Federal Revenue $9,163,804 $2,283,945Cash Funds $18,546 $1,450Other Funds $5,386,871 $1,621,471Total Operating Expenditures $49,275,145 $44,167,159

Definition of efficiency. "The Arkansas Agriculture Department defines efficiency as the ability to effectively and professionally fulfill its mission and statutory obligations with the least amount of staff and other resources. The Arkansas Agriculture Department is committed to excellent stewardship of taxpayer funds while providing needed services to the public."37

AAD has voluntarily eliminated 19 positions, reducing authorized staff from 590 to 571, according to officials.38

Performance measures. AAD "uses performance measures to define efficiency and other qualifications in personnel evaluations. Several federal grants administered by (AAD) utilize performance measures to determine the efficient use of funds. In addition, the Arkansas State Plant Board uses specified time periods to determine efficient response time for licensing requests. The Arkansas Agriculture Department has spent considerable time over the past year identifying immediate and long-term changes to improve efficiency and reduce costs. The Arkansas Agriculture Department anticipates the inclusion of more efficiency performance measures through the creation of a 5 year strategic plan which has been identified as a goal to assist with identifying and implementing needed consolidations and efficiency measures."39

Customer base. AAD reports its customer base "is defined in broad terms in the enabling legislation for each agency."40

36 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx37 AAD response to questionnaire. 38 AAD communication39 AAD response to questionnaire40 Act 1978 of 2005 directs AAD to "develop and implement policies and programs for Arkansas agriculture and forestry to keep them competitive while ensuring safe food, fiber and forest products for the citizens of the state and nation." The Arkansas Forestry Commission (PA 234 of 1931) to protect Arkansas’s forests, and those who enjoy them, from wild land fire and natural hazards. The Plant Act (1917) instructs the Plant Board to maintain administrative services and controls to effectively serve the regulated industries and the general public. The Livestock and Poultry Commission's enabling legislation authorizes it "to safeguard human and animal health, assure food safety and quality, and promote Arkansas livestock and poultry industries for the benefit of our

Efficiencies in states in region. None identified by volunteer.41

Recommendations

The department's mission statement should be amended to include efficiency as a policy goal, and a strategic plan should be developed and include a section on efficiency. Both should be posted online.

Department-identified consolidation and restructuring initiatives should be encouraged. (These are discussed in Footnote No. 2)

citizens." The specific customer base of programs within AAD is identified "as prescribed by program rules and regulations. Regulatory programs maintain lists of licensees, registrants, inspection locations and testing sites. Lists of participants in the department’s voluntary programs are also maintained."41 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Assessment Coordination Department

Summary




Use of tax dollars. Arkansas Assessment Coordination (ACD)44 total operating expenditures increased (2.7%) at a rate less than CPI (9%) in the period under review. The following chart reports funding by source:45

FY 2009 FY 2015

General Revenue $812,000 $2,821,479Special Revenue --- $14,608,839 Cash Funds $41,321 $500Other Funds $16,119,581 ---Total Operating Expenditures $16,972,902 $17,430,818

Definition of efficiency. The department defines efficiency as "the highest and best use of personnel and appropriations to achieve the goals and responsibilities assigned to ACD" by Arkansas statutes. Efficiency is also defined as "the completion of tasks on or before the deadline or due date while utilizing the employee(s) with the skill sets most appropriate to complete the tasks."

The department did not report any voluntary reduction in authorized staff.

Performance measures. The department "measures performance of its personnel through performance evaluations, auditor production reports and auditor work schedules," according to ACD's response to our questionnaire. ACD "does not

42 ACD's mission statement states, “Our mission is to ensure fair and equitable valuation of property for ad valorem tax purposes.”43 ACD identified three efficiencies in its response to a questionnaire: 1) ACD office staff recently completed the “7 Habits of Highly Effective People” training course provided through DFA-OPM; 2) ACD is currently compiling work flow charts for all department functions; after the work flow charts are complete, the functions will be reviewed and assigned to the most appropriate staff members; and 3) ACD is also in the process of revising job descriptions for office and field staff. 44 ACD states "the objective of attaining ad valorem taxation fairness, consistency and equity among taxpayers in Arkansas. While property taxes are locally assessed, administered, collected and dispensed by each County, the equity of the assessments within the County and between Counties is of state-wide importance." 45 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

utilize traditional employee performance measures such as the number of transactions per hour/day or similar measures."46

Customer base. ACD’s customer base includes "taxpayers, local elected officials, the Arkansas General Assembly and the Executive branch of Arkansas state government."


Recommendations


46 The department noted, "These performance measures do not readily lend themselves to ACD’s functions, which include providing guidance to county assessors on the market value of personal property, auditing the progress of county-wide real property reappraisals, determining county-wide reappraisal compliance with statutory requirements, providing ad valorem tax assistance to taxpayers, county officials, the General Assembly and the Executive branch of Arkansas state government and compiling ad valorem tax data for the General Assembly and Executive branch of Arkansas state government."47 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Department of Aeronautics

Summary

Mission Statement cites efficiency? No Strategic plan posted with efficiency section? No Spending greater than CPI? No Performance measures Yes Customer base defined? Yes Efficiencies in states in region? Indirect Department-identified efficiencies? Yes48

Dollar amount from identified efficiencies? Varies49

Use of tax dollars. ADA is the smallest state department, overseeing "inspection of airports and air navigation facilities," encouraging "the establishment and planned expansion of airports," promoting "aviation safety/security," and administering the state airport aid program.50 Spending declined 21% in the period under review, as the following chart illustrates:51

FY 2009 FY 2015

General Revenue --- ---Special Revenue $12,081,309 $9,597,094 Federal Revenue $73,300 ---Total Operating Expenditures $12,154,609 $9,597,094

Definition of efficiency. The Aeronautics Department defines efficiency as "administering the ADA Grant Program with maximum efficiency to meet the needs of airports statewide."

The department operates with five employees.

Performance measures. The department measures the “turn-around” time for a grant payment "after the request for reimbursement has been made by an airport." The Commission also "meets monthly to consider grant requests so that airport improvement projects can move forward in a timely manner."

Customer base. The Aeronautics Department defines its customer base as "all 92 public airports across the state."

48 During an interview it was noted the department has operated with five staffers.49 ADA is funded by a special revenue derived from the sales tax on aviation fuel, aircraft, aircraft parts and maintenance. The department receives no general revenue funds. Sales tax revenues are price sensitive. Hence, when the price of fuel increases department revenues increase. Conversely, when the cost of fuel drops, revenue drops as well. Fuel prices (and revenues) peaked in 2010-2012 and "have been experiencing a fairly steady decrease since." ADA communication50 Arkansas Department of Aeronautics Mission Statement: http://fly.arkansas.gov/mission-statement.html51 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx.

Efficiencies in states in region. Indirect.52

Recommendations


The department's self-described "K.I.S.S." method53 for managing grants should be shared with other state agencies.

52 Reason Foundation, Annual Privatization Report 2014, p. 66. Virginia Department of Transportation, operation of "five transportation operations centers." 53 "First, our grant program is very simple. We believe that by reducing "bureaucracy" and keeping the program simple it will reduce staff involvement while, at the same time, making the program "user friendly" for our airports. Our grant program is available to all 92 public-owned airports in Arkansas and all 92 have participated in the program. We believe that the "K.I.S.S." method is a significant reason that airports are participating in the grant program at a high rate. Second, we have made our grant application process elegantly simple as well. The application itself is available to airports on our website and can be submitted electronically reducing time and resources necessary to apply for a grant. The application is only 2 pages and is very simple and straight-forward to complete. Third, by requiring that airports apply for a grant BEFORE beginning a project, we can eliminate many potential pitfalls, both in the grant application and the project itself, which, again, reduces staff workload and project resources." ADA communication

Arkansas Department of Career Education

Summary


Strategic plan posted with efficiency reference? Yes55

Spending greater than CPI? No Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes56

Dollar amount from identified efficiencies? Undetermined

Use of tax dollars. Total operating expenditures at ARCareerEd declined in the period under review. The following chart shows funding by source:57

54 ARCareerEd includes Career Education and Arkansas Rehabilitation Services (ARS). ARCareerEd "has the mission of providing leadership and contributing resources to serve the diverse and changing career educational needs of Arkansas youth, adults, and persons living with disabilities. As part of the mission, ARCareerEd oversees career and technical education programs in the secondary schools, secondary area career centers, adult and youth apprenticeship programs, two postsecondary technical institutes and the vocational technical school within the Department of Correction, Arkansas Rehabilitation Services, and adult education programs. ARCareerEd also works with the Veterans Administration to approve state educational programs for veterans’ benefits.”55 ARCareerEd has a strategic plan but a volunteer did not find it posted.56 ARCareerEd identified 13 efficiencies in its response to a questionnaire: 1) "Every time the finance division has vacant positions, instead of seeking an extra help, we distribute the job duties to the appropriate employees to avoid interruption or delay of services; 2) (Adult Education Division) Staff meetings are held twice a month to inform employees, exchange information and collaborate in order to reach organization goals. Issues and concerns are brought before the group, policies and procedures are reviewed, and new strategies for implementation are created. Team members have input on the direction the organization is headed and the expectations are high. As a result, the morale and motivation within the division is high. One of the factors that contribute to the division’s efficiency is the ability to hire qualified individuals who are competent, professional, and have the desire to make a difference. Hiring individuals who possess the experience, skills, and leadership not only increases the efficiency of an organization, but also reduces any training costs or mistakes that may occur as a result of hiring unqualified individuals for a position; 3) The Technical Assistance Visit program has been revised to provide three types of visits: full visit by staff to schools, abbreviated visit by staff to schools or staff completes or a desk audit based on recommendations from state staff and staff in the educational service cooperatives; 4) Professional development guidelines have been implemented to enhance agency efficiency. ARCareerEd staff training and training for school teachers and administrators is being planned and executed in a more efficient method, both in human and financial resources; 5) The Modern Workplace, a professional development initiative to teach LEAN, KAIZEN and 5S, has enabled staff to make many efficient suggestions for better serving students and schools while maintaining the service of the agency; 6) ARCareerEd OSD is at the beginning stages of implementing a program of conversion of paper filing, reporting, and signoff to electronic processes among all programs, beginning with rollout of OSD Grants. This should result in a reduction in paper usage of at least 50% and considerable time savings; 7) ARCareerEd OSD, in collaboration with ARCareerEd CTE and the ARCareerEd Finance Office, as well as with inputs from the Department of Education (ADE) and community colleges, are reviewing all SCTC budget, operations, and programs in order to provide more equitable services to students statewide, eliminate waste, and improve the quality of high priority programs. The efforts significantly implicate and impact community colleges and school districts both in terms of meeting state education requirements, quality of services, and budgets. It is estimated that an SCTC budget may be as much as 20% of a community college’s total budget in certain cases. SCTC indirect costs paid to host schools range from zero to 30%; 8) (Adult Education Division) All forms used by grantees have been put on the department’s homepage for easy access. 9) Travel policies have been implemented to provide a more efficient method of staff travel, enhancing both human and financial resources; 10) ARCareerEd has used technology to provide meetings, interviews, and enable staff to participate in more opportunities in a more efficient method of delivery. 11) In order to help reduce the amount of time spent completing data match and funding, the state office is creating a step by step written process.; 12) During February and March, the Adult Education Division held a meeting for local education agencies (LEA) overseeing adult education and literacy programs. During program reviews and financial audits over the years, it was discovered that some LEAs were unaware they were the fiscal agent responsible the adult education and literacy programs. In order to address this issue, the state office conducted its first LEA meeting .. This is the first time that the Adult Education Division has conducted a training specifically designed for entities that oversee the adult education and council programs." (ARS) "Recent implementation of an agency wide fiscal year out of state travel plan for FY2016 has improved efficient use of limited agency funds for training and program support."57 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx. Subtotal includes Crowley's Ridge Technical Institute, Northwest Technical Institute, Rehabilitation Services, Riverside Vo-Tech School, and Public School Fund.

FY 201058 FY 2015

Administration

General Revenue $2,865,430 $3,710,773Federal Revenue $21,249,102 $16,974,146Cash Funds $1,809 $1,305,971Other Funds $4,182,933 $3,835,193Total Operating Expenditures $28,299,274 $25,826,084

Subtotal, Department

Total Operating Expenditures $136,919,503 $136,641,334

Definition of efficiency. (ARCareerEd Finance) "Efficiency is monitoring agency budget for accuracy and to ensure that no unallowable payment occurs." (ARCareerEd Adult Education) "... the ability to accomplish tasks with the least waste of time and effort." (ARCareerEd Career and Technical Education) " ... serving and supporting the CTE students, teachers, and administrators in the most effective manner based on the policies and procedures set forth by state and federal entities." (ARCareerEd Office of Skills Development) "Generally maximizing customer benefit and maximizing resources." (ARS) "... utilizing targeted, focused processes to provide cost effective vocational education services resulting in competitive employment for individuals with disabilities."59 ARCareerEd has voluntarily eliminated 1 position, reducing authorized staff from 96 to 95. ARS has not reduced staff and remains at 537 but recently offered to surrender 28 positions.60

Performance measures. "Performance measures are a part of the agency wide strategic plan development, and aligned with measures mandated by the Workforce Innovations Opportunity Act and detailed in the federally required State Plan." (ACE Finance) "We have internal controls which prevent risks and audit findings for the agency. We also have auditors in place who audit the grants that are approved for programs." (Adult Education) "(The) Adult Education Division uses an Effective and Efficient (E&E) calculation to determine whether programs are meeting performance measures. To be considered effective and efficient, local adult education programs and literacy councils receiving adult education funds are required to meet or exceed the percentage of the federal negotiated core indicators. Programs that fail to meet the percentage requirement in the first year will be required to submit an improvement plan. The improvement plan addresses each core indicator of performance that was not

58 PA 787 of 2009 renamed the Arkansas Department of Workforce Education as the Arkansas Department of Career Education.http://www.dfa.arkansas.gov/offices/budget/budgetRequests/0590_career_ed.pdf59 ARCareerEd response to questionnaire. 60 ARCareerEd communications

met and includes measurable objectives for correcting deficiencies during the following year." (Career and Technical Education) All funds provided to CTE programs located in secondary schools and area career centers are done so based on standards set forth by the funding agencies. An annual review is conducted each year on these funding procedures. Funding requests are scored by CTE office personnel using a standard rubric. Also, Arkansas labor market data is reviewed to determine the need for these programs and courses in a specific economic region. The procedures for funds distribution is currently under review to increase the efficiency and accountability of fund management at the state and local levels." (Office of Skills Development) "We are currently developing performance measures, both improving on existing ones and creating measures where there have been none." (ARS) "Performance measures are a part of the agency wide strategic plan development, and aligned with measures mandated by the Workforce Innovations Opportunity Act and detailed in the federally required State Plan."61

Customer base.62 "Agency staff, Board Members, (and) grant recipients (school district, colleges, literacy council, educational cooperatives)."63 Individuals "with disabilities seeking skills development for participation in the workforce as well as business and industry who express workforce needs. Understanding the workforce needs allows the agency to drive training toward available jobs ... individuals served through independent living funds to assist with physical accessibility modifications." (ARS) Individuals "with disabilities seeking skills development for participation in the workforce as well as business and industry who express workforce needs. Understanding the workforce needs allows the agency to drive training toward available jobs." Individuals "served through independent living funds to assist with physical accessibility modifications."

Efficiencies in states in region. Five states identified by volunteer.64

Recommendations


61 ARCareerEd response to questionnaire62 At a Board strategic meeting in June, the following customers were identified: "i. Secondary and Postsecondary administrators, teachers and students, educational cooperatives, sub-grantees, federal and state funders, federal and state lawmakers, all federal and state agency partners, employers, employees, governor of Arkansas. b. The balance is specific to ARS and should be noted as such." The ARS base includes "Arkansas employers seeking to hire or retain individuals with disabilities as part of their workforce."63 Ibid.64 West Virginia (2013); and Florida, Georgia, Kentucky and South Carolina (2014) used a PPP (Public-Private Partnership) or privatization initiative to develop student housing, dining facilities, a health clinic, pharmacy and a fitness center. Reason Foundation, Annual Privatization Report 2014, pp. 38-39; Annual Privatization Report 2015, pp. 12-15.

PPP and privatization initiatives undertaken in the region should be analyzed for their potential to reduce costs and increase efficiencies in Arkansas.

Arkansas Department of Community Correction

Summary


Strategic plan posted with efficiency reference? Yes Spending greater than CPI? Yes Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes66

Dollar amount savings from efficiencies? $321,000-$6.5 million67

65 Mission Statement: “To enhance public safety by enforcing state laws and court mandates through community partnerships and evidence-based program that hold offenders accountable while engaging them in opportunities to become law-abiding, productive citizens.” http://www.dcc.arkansas.gov/about-us. ACC may consider the issue at a November meeting. ACC communication.66 ACC identified 19 efficiencies: "ACC has worked to incorporate efficiencies and savings in order to make up a $2 million shortfall in operating expenditures from previous administrations that required salary savings to make up the difference." (Information Technology) 1) Eliminated landlines in lieu of cell phones where employees had both. (Y1 savings: $158,000; 2) Renegotiated a new cell phone and table/Ipad plan and phased out tablet service in lieu of hotspots saving $40 per device per month ( $100,000 estimated Y1 savings); 3) Using online GoTo meetings to save travel costs; (eOMIS-Offender Management Information System) 4) Automated offender banking and implemented online deposits to address a Legislative Audit Finding. The policy will save staff time entering money orders and monthly reconciliations; 5) Automation of Arkansas Parole Board processes and voting system enabling commissioners to have current data available when making parole release decisions–eliminated ACC Release Officer staff having to print “boxes” of information weekly resulting in staff time and paper, copier, and transportation expenses; 6) Installed signature pads to capture staff and/or offender signatures on documents eliminating printing costs and staff time to “scan” printed documents; 7) Automate additional processes as time/money allows to save officers time on administrative tasks to allow more time for offender supervision. Example–referral process for offenders automated for assessments for counseling, drug treatment, etc; (Reentry Efforts) 8) Operationalizing the Good Grid-comprehensive web-based reentry portal for offenders in need of various services. Includes a statewide director of employers, volunteers and service providers that assist in successful offender reentry. Includes resume builder and job bank of businesses willing to hire offenders. Donation of programming/development services has been valued at $20 million + benefit to the state; 9) Reentry Services had placed more than 300 residents in reentry facility beds in 2015 as of Sept. 30, and 122 have graduated. The average resident housing cost at a reentry facility is less than half the amount to house a state prison inmate. ACC estimates reentry facilities have saved approximately $2.5 million to date; 10) Significant progress in all ACC locations to assist parolee/probationers to apply for insurance coverage under the Affordable Care Act which gives them substance abuse disorder and mental health treatment coverage. Policy reduces need for additional in-house treatment and counseling staff; (Parole and Probation Services) 11) Implemented a risk and needs assessment tool and have one year of data to reassess its validity. Board adopted a new Offender Violation Guide and parole revocation policy that provides offenders more opportunities to comply with conditions of parole when used with assessment tool. County jail backup significantly reduced; 12) Implemented kiosk reporting for low-risk offenders. Sixty kiosks in 41 statewide locations that allow low-to-medium risk offenders, biometrically enrolled, to check in, pay fees, and receive messages from officers. Policy allows officers more time for moderate and high-risk offenders and to direct resources and programs toward offenders more likely to reoffend; (Administrative Services) 13) Eliminated receptionist and automated reception line; 14) Scrutinize all leases up for renewal and alternative space acquired when costs can be lowered. Bentonville ($14.42 a sq. ft., 7,500 sq. ft.) to Rogers move ($8 a sq. ft., 9,900 sq. ft., annual savings of about $36,000). Purchased Hope Workforce Services Building ($25,000). The building will be paid for within five years with current lease cost after renovations. Proposed Walnut Ridge move to Pocahontas ($10,000 annual savings) did not occur. Central and Parole Office leases are $688,000 per year (about 43,000 sq. ft.) The $13.85 per sq. ft. cost could be reduced if not in the LR Financial quarter; 15) Phased out personal printers/fax machines in lieu of a multi-print station and high reliance on scanning to email rather than hard copies; 16) Implemented new procurement procedure requiring prior approval from central office supervisor for all but required/emergency purchases; 17) Staff training to the field to reduce travel expenses; 18) Centralized food ordering system based on dietician’s menu and number of residents reduces potential over-ordering of supplies; 19) Ordering less expensive but equivalent quality bullet proof vests (SML) in lieu of individually fitted vests that can be reused until expiration date.67 ACC estimates Reentry Beds privatization has saved approximately $2.5 million to date, about "half of what it would have cost to keep the inmate in prison. When all 500 reentry beds are on line, the savings should be $6.2 million annually not counting the additional 6 to 12 months the offender(s) likely would have stayed in prison." ACC communication

Use of tax dollars. Total operating expenditures at the Arkansas Department of Community Correction (ACC) increased 22.5% versus CPI (9%) in the period under review:68

FY 2009 FY 2015

General Revenue $63,365,083 $77,092,397Special Revenue $8,577,047 $10,259,922Federal Revenue $126,150 $103,623Cash Funds $1,130,746 $2,224,936Other Funds $7,541 ---Total Operating Expenditures $73,206,567 $89,680,879

Definition of efficiency. ACC defines efficiency from two views: operational and strategic. "From an operational view, we strive to deliver the same or greater level of service at the lowest cost to the state – e.g., ACC eliminated land line telephones for all ACC staff assigned a cell phone resulting in approximately $157,000 per year savings with very few impediments to operations.

"From a strategic view, our efficiency is defined by how close we come to meeting performance targets laid out in our strategic plan – e.g., through effective parole/probation supervision and reentry efforts, a reduction in recidivism can produce significant savings to the state through costs avoided in building and operating additional prisons."69

ACC advised "existing positions have been reassigned to areas to enhance performance and help the agency, which has never been funded/staffed to national standards in order to achieve performance targets. Example, a position was reassigned to serve as a Transitional Housing Coordinator to ensure those housing parole and probation offenders meet at least minimum standards for basic quality of life. This position oversees placement of a GPS device on all offenders assigned to a transitional house. This enabled us to implement a process to hold operators/offenders accountable and did result in significant savings. Other positions were reassigned to implement a Reentry Division."70

Performance measures. ACC incorporates "performance targets" in its Strategic Plan that guide how the department meets legislative mandates and its agency mission."71 These include increasing the percentage of probationers who test negative for drugs and those referred to GED and literacy programs.72

68 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx. Total expenditures declined from 2014 to 2015. 69 ACC response to questionnaire. 70 ACC communication71 ACC response to questionnaire72 The first performance measure seeks a 70% participation rate by FY-2017-18. The second seeks a 100% rate by FY 2017-18. Analysts from the Council of State Governments Justice Center briefed the Efficiency Project on performance measures. The Center presented testimony to the Arkansas Legislative Criminal Justice Oversight Task Force. The Pew Charitable Trusts help fund the initiative. Center analysts contend the greatest opportunity for increasing public safety is improving supervisory systems.

Customer base. ACC provided the following information: " We believe our Mission “to enhance public safety by enforcing state laws and court mandates through community partnerships and evidence-based programs that hold offenders accountable while engaging them in opportunities to become law-abiding, productive citizens” pretty well sums up our customer base. However, we are also accountable to: A constitutionally mandated and legislatively authorized Board of Corrections–a 7 member Board that has general supervisory power and control over the ACC and ADC (Section 12-27-105). The Board appoints the Director of ACC - who serves at its pleasure. (Section 12-27-126). Governor/Executive Branch Regulatory Agencies–Governor is elected chief executive of the state over applicable state agencies. Guides policy recommendations made to the General Assembly. Appoints members of boards and commissions and heads of state agencies and departments. Regulatory agencies such as the Department of Finance and Administration, Arkansas Building Authority, Environmental Quality, etc., establish regulations/standards applicable to all agencies. Arkansas General Assembly–legislative body of elected representatives governing the state of Arkansas. Arkansas Judicial System–offenders are assigned to our supervision by the criminal courts in 23 numbered judicial circuits under certain conditions. Prosecutors–serving judicial districts and charged with prosecuting criminal cases; ACC supports cooperative efforts to ensure public safety. Parole Board–ACC supports efforts of the Parole Board by assisting in identifying when an inmate is eligible for parole consideration, scheduling the inmate for a parole hearing when eligible, and then supervising those inmates approved for release by the Arkansas Parole Board. Various state and federal law enforcement entities–ACC supports cooperative efforts to ensure public safety."ACC is also accountable to:

The approximate 55,000 individuals on probation and parole; 1,600 individuals assigned to an ACC Residential Community Correction Treatment Program or Technical Violator Center and their respective family, advocates, etc."73


ACC has advanced privatization initiatives unreported in the regional survey:75

Reentry Beds allow ACC to "release someone within 18 months of parole into an approved reentry facility." Daily vendor rates are $30.63 versus the alternative: the inmate serving "at least $65 per day." The parolee must be employed after 45 days and reimburse the facility $14 per day. ACC describes Reentry Beds as "a four-phase, six month program ending in graduation," with 95 graduates to date and a 500-bed goal.

73 ACC response to questionnaire74 Reason Foundation, Annual Privatization Report 2014, 201575 ACC communication

ACC contracts for transitional housing beds funded by Best Practices Funds ($10 of $35 monthly probation/parole supervision fees paid by offenders). Transitional housing allows parolees leaving prison "that do not have a parole plan to apply for transitional housing at locations across the state."

ACC budgets $500,000 for Parole and Probation Treatment Services that may not be covered by the Affordable Health Care or private insurance. Private and non-profit providers participate. ACC budgets $500,000 per year for Drug Court treatment services. Private providers that may include nonprofit organizations

ACC contracts for "comprehensive health services for inmates/residents in confined prisons or treatment centers as we have found in the past that it is more cost effective to do so."

ACC contracts for software licenses and maintenance of an integrated electronic offender management information system.

Pay For Success/Social Impact Bonds (PFS). The Office of State Procurement on behalf of ACC recently posted an RFQ to establish a Pay for Success program with the goal of reducing Arkansas’s prison population. PFS programs are innovative, public-private partnerships that can save taxpayer dollars and improve the performance of social services. Under a PFS program, philanthropic and private funders provide upfront capital to a service provider to deliver a preventative intervention and the state only pays the original funders once agreed upon outcomes are met. ACC received a grant from the Harvard Kennedy School of Government to provide a fellow to assist Arkansas in developing a pay for success program.

Recommendations

The department's mission statement should be amended to include efficiency as a policy goal, and posted online.

A future Efficiency Review should identify efficiencies in states outside the region. The Review should focus on three of ACC's five largest program areas.76 These are: 1) Parole and Probation Field Services;77 2)

76 ACC response to questionnaire. The other two areas are Information Technology/Research and the Interstate Compact.77 Community-based supervision allows offenders to live at home under defined conditions: a) All parolees have been granted a conditional release from prison prior to end of their sentence and are placed under ACC supervision. Probationers have been allowed by a judge to remain in the community under ACC supervision under specific conditions; b) All offenders are placed on minimum, medium or maximum level of supervision in accordance with a validated risk/needs assessment. The assessment helps guide placement of offenders in treatment/education/employment programs. Community based sanctions and treatment alternatives are utilized to reduce the number of offenders sent or returned to prison; c) Parole and Probation Officers assigned to one of 13 areas (52 offices) across the state attend the Arkansas Law Enforcement Training Academy and are specially-certified law enforcement officers; d) Institutional Release Officers identify when an inmate is eligible for parole consideration and are responsible

Residential Community Correction Treatment Facilities;78 and 3) Reentry Programs.79

Pennsylvania is one example of a state outside the region advancing efficiency in community corrections.80

for scheduling the inmate for a parole hearing when eligible, and preparing paperwork to enable the release of inmates approved by the Arkansas Parole Board; e) Field Services includes a Sex Offender Aftercare Program that trains specialized Parole/Probation officers to supervise high profile level 3 and 4 sex offenders in the community; f) Field Services includes a Special Response Team trained in fugitive parole/probation apprehension of those that abscond (fail to report) their supervision; g) Field Services assists with Reentry Programs as a department program; h) Field Services staff (officers, counselors, administrative specialists) supports specialty courts that handle probation cases involving alcohol, substance abuse, and behavioral health issues through intense supervision, monitoring, and treatment programs. Clients receive outpatient and/or inpatient treatment and counseling, are subject to economic and other sanctions, and are subject to include frequent drug testing and court appearances. Successful completion of the program results in dismissal of the charges, reduced or set-aside sentences, lesser penalties, or a combination; i) A Parole and Probation Manual guides daily requirements for parole and probation supervision of offenders; j) Day Reporting Centers provide comprehensive, non-residential services designed to promote public safety, provide offender accountability and control through intense supervision and surveillance, facilitates offender rehabilitation through behavior modification, substance abuse counseling and education, and helps develop employment skills. Offenders may participate as a condition of supervision or as a sanction for non-compliance with supervisory terms and conditions; k) Parole & Probation Field Services operations are accredited by the American Correctional Association and the Division is under the executive direction of the Deputy Director of Field Services." 78 "Five regionally based residential licensed treatment facilities provide structure, supervision, surveillance, drug/alcohol treatment, educational and vocational programs, employment counseling, socialization and life skills programs, community work transition and/or forms of treatment and program." A Technical Violator Center located at Malvern provides an alternative sanction for offenders who commit technical parole violations, decreasing the number of parolees returned to an Arkansas Department of Correction prison for technical violations. Current capacity is 1,603. Commitments range from 45 days to two years. The average resident spends about 9 months in a treatment center. Center operations are accredited by the American Correctional Association. The residential centers are under the executive direction of the Deputy Director of Residential Services."79 "Act 1190 of 2013 charged the ACC with the responsibility of convening joint sessions with multiple state and local agencies and community organizations to creating “a holistic and seamless approach for reentry” for Arkansas. The Act 1190 Report provides a summary of current efforts to reduce the recidivism rate of returning offenders in Arkansas and additional recommendations for policies and resources needed to improve the state’s reentry system. This report and corresponding recommendations are available on the ACC webpage. Out of the report grew a Reentry Division headed by an Assistant Director of Reentry. The division is currently under the executive direction of the ACC Chief Deputy Director. Efforts that have been implemented include: a) A recommendation of the reentry plan included a recommendation to open 500 reentry beds which were funded by Governor Hutchinson. An RFP was released and ACC is in the process of awarding contracts for the operation of these beds; b) Transitional housing is funded through Best Practices monies and provides housing for offenders who have been transferred or paroled to the ACC by the Parole Board or has been placed on probation by a circuit or district court. ACC licenses and monitors all transitional housing providers for accountability to offenders and the state; c) The Good Grid is a comprehensive reentry portal designed to assist offenders and their families identify community resources; d) A Mentoring Coordinator is establishing a statewide mentoring program that seeks to match all returning offenders with a mentor in their respective community; e) Community Based Organizations – ACC is supporting efforts of the Restore Hope AR initiative, dedicated to facilitating public/private partnerships and collaborations with stakeholders statewide to provide evidence based solution that will not only have an impact on recidivism of offenders, but on restoration of families; f) Counselors and substance abuse program leaders provide substance abuse and co-occurring disorder services stateside. Services include outpatient substance abuse and mental health related counseling, life and social skills, employment readiness, health education, and referral services." 80 Chieppo, Charles. 2015. "The Pay-for-Performance Approach to Reducing Recidivism: The early success of a Pennsylvania program for parolees shows the potential for one form of privatization" (Sept. 10) Governing. Chieppo is a Research fellow at the Harvard Kennedy School's Ash Center.

Arkansas Department of Correction

Summary

Mission Statement cites efficiency? Yes81


Spending greater than CPI? Yes Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes83


Use of tax dollars. Total operating expenditures at the Arkansas Department of Corrections (ADC) increased 20% versus CPI (9%) in the period under review:84

FY 2009 FY 2015

General Revenue $275,802,921 $337,311,060Special Revenue $19,290,330 $19,309,688Federal Revenue $419,607 ---Cash Funds $15,688,956 $19,037,536Other Funds $944,672 --- Total Operating Expenditures $312,146,486 $375,658,284

Definition of efficiency. ADC defines efficiency as "reducing energy cost and usage; providing various treatment programs, work opportunities, educational programs and vocational training all while providing for public safety and carrying out the mandates of the courts."85

ADC has voluntarily eliminated 18 positions, reducing authorized staff from 4,752 to 4,734.86

Performance measures. ADC provided the following information: "For energy consumption, the performance measures used are seasonally adjusted

81 “The vision of the Arkansas Department of Correction is to be an honorable and professional organization through ethical and innovative leadership at all levels, providing cost efficient, superior correctional services that return productive people to the community.” http://adc.arkansas.gov/goals-and-objectives82 http://adc.arkansas.gov/images/uploads/2012-2016_Strategic_Plan.pdf83 ADC identified two efficiencies in its response to a questionnaire: "1) In an initiative to improve efficiency, the Department replaces outdated equipment with newer energy-efficient equipment and expands construction efforts that incorporated energy-saving elements. As a result, the ADC received ‘checks’ symbolic of energy savings and incentives from CenterPoint Energy and Entergy. The checks for energy efficiency incentives total close to $400,000 from all efforts combined and amount to savings of about $2.8 million; 2) The Department has also improved our pre-release planning by assigning eligible inmates to a re-entry barracks with a designated accountability coach who will work on preparing the inmates for successful re-entry into the community."84 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx. Total expenditures increased from 2014 to 2015. 85 ADC response to questionnaire. 86 ADC communication

measurements of each Units energy consumption as measured in kBtu/SF. These are measured at each meter at each Unit. Also, by training and program evaluations."

Customer base. ADC defines its customer base as "inmates, taxpayers and citizens of Arkansas."87

Efficiencies in states in region. Nine identified by volunteer.88

Recommendations

Arkansas is among three states in the region that does not utilize Corrections privatization.89 The percentage of inmates housed in private facilities elsewhere in the region, and those housed by the federal system nationwide is shown in the following chart:90

Inmates, Private Percentage (%), TotalFacilities, 2013 Jurisdictional Population

Mississippi 4,394 20.0%Federal 41,159 19.1%Tennessee 5,103 17.9%Georgia 7,900 14.6%Florida 11,801 11.5%Louisiana 3,158 8.0%Virginia 1,554 4.2%Alabama 554 1.7%North Carolina 30 0.1%South Carolina 15 0.1%Arkansas 0 0.0%Kentucky 0 0.0%West Virginia 0 0.0%

A future Efficiency Review should identify efficiencies in states outside the region, and focus on ADC's largest program areas in terms of budgetary size: Inmate Care and Custody;91 Farm;92 Industry;93 and Work Release.94

87 ADC response to questionnaire88 Reason Foundation, Annual Privatization Report 2014, 201589 Reason Foundation, Annual Privatization Report 2015, Criminal Justice and Corrections, p. 7, http://reason.org/files/apr-2015-criminal-justice.pdf. A department official said in an interview that privatization had been tried but did not work.90 Ibid., Sources: 2012-2013 data: U.S. Department of Justice, Bureau of Justice Statistics, Prisoners in 2013 , September 2014, p. 14, http://www.bjs.gov/content/pub/pdf/p13.pdf91 a) Salaries and matching expenses; b) Medical; c) Food Purchases; d) Utilities; and e) Building and Grounds Maintenance.92 a) Seed, Feed, Fertilizer, Chemicals, Non-Inventory Items; b) Salaries and matching expenses; c) Utilities; d) Repair Services–Building & Equipment; e) Rent/Lease-Equipment.93 a) Resale Non-Inventory Items; b) Salaries and matching expenses; c) Utilities; d) Repair Services – Building & Equipment94 a) Building and Grounds Maintenance; b) Utilities; c) Food Purchases; d) Fuel

Arkansas Department of Education

Summary


Strategic plan posted with efficiency reference? No Spending greater than CPI? Yes Performance measures? Yes Customer base identified? No Efficiencies in states in region? Yes Department-identified efficiencies? Yes96

Dollar amount from identified efficiencies? $1,520,000

Use of Tax Dollars. Total Arkansas Department of Education (ADE) operational expenditures increased 8% versus CPI (9.0%) in the period under review. The following chart shows funding by source:97

FY 2009 FY 2015

General Revenue $ 1,937,654,075 $2,171,259,126Federal Revenue $495,331,789 $ 534,000,433Cash Funds $20,379,293 $24,400,483Other Funds $746,215,022 $727,928,636 Total Operating Expenditures $3,199,580,179 $3,457,588,679

Definition of efficiency. In "practice we work to maximize quality service to our customers within the approved budgetary parameters."98

95 "Mission: The Arkansas Department of Education provides leadership, support, and service to schools, districts, and communities so every student graduates prepared for college, career, and community engagement.""Vision: The Arkansas Department of Education is transforming Arkansas to lead the nation in student-focused education."96 The department identified nine efficiencies in response to a Policy Foundation questionnaire. 1) Records Retention Policy – Through revision of and training on the ADE Records Retention Policy, ADE team members will reduce the unnecessary retention of paper documents and increase the use of electronic storage. This will reduce or eliminate the need for offsite document storage (Estimated savings – $25,000 annually); 2) ADE Unit Relocation – Over the next three years as current leases expire, relocate the offsite units of ADE to the Arch Ford and Lu Hardin buildings (Estimated savings - $200,000 annually); 3) APSCN Upgrade (in partnership with DIS) – upgrade the bandwidth capacity of the Arkansas Public School Computer Network (Potential savings – 40x increase in capacity (5 kbps per user to 200 kbps per use) using current budget level); 4) SBS Print Management Project – Optimize print utilization based on data. Reduce/remove desktop printers and move to centralized printing, scanning, and copying using multi-functional copiers (Estimated savings - $20,000 annually) (Note: This is the third time the print management system has been reviewed in approximately 2 years); 5) Upgrade State Board agenda system – Transition to Boardbook, an online system that provides for public viewing of meeting agenda and supporting documentation. (Known savings - $600 annually); 6) Discontinue old support systems (ATLAS and Teachscape) for educator mentoring and credentialing; utilize functions of BloomBoard, a system currently in use by ADE Office of Educator Effectiveness (Estimated savings - $350,000 annually); 7) Research and Technology Division - Upgrade to eFinance 5.1, which eliminate the need for a Unix server. Eliminate support of video conference technology in coops and replace with ZOOM platform (Estimated savings - $550,000 annually); 8) Public School Accountability Unit – Reduce duplication of monitoring activities, allowing the combination of the Federal and State Monitoring Unit with the Standards Assurance Unit to create the Standards Monitoring Unit (Estimated Savings - $500,000); 9) Professional Licensure and Standards Board – move from MAC to Arch Ford Building (Estimated Savings - $75,000 (rent and security costs)).97 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx98 ADE communication

Performance measures. ADE cited one example in its response to a questionnaire: PA 1181 of 2015 ("Reduce Duplicative Reporting by Districts to ADE and ACE"). Three overall goals were identified: 1") Working to improve internal processes and management tools; 2) Identifying ways to improve data quality, collection and shared access among ADE and ACE; and 3) Organizing a thorough, long-term process to maximize the potential (the improvements and efficiencies) of the state’s reporting systems."99

Customer base. ADE defines its customer base as follows: "Through the ADE Strategic Process Management initiative, we identify our customers as students, parents, community, educators, employers, taxpayers, and stakeholders."

Efficiencies in states in region. Two identified by volunteer.100

Recommendations


The department's performance measures are inadequate and must be strengthened.

Legal guardians should be added to the department's customer base.

Public-private partnerships have the potential to increase efficiencies within K-12 education.

Arkansas is competing in a global economy. A future Efficiency Review should identify efficiencies in states outside the region.

99 ADE response to questionnaire. The measure states, "During the 2015-2016 school year, ADE will develop new desk auditing processes/procedures, streamline on-site monitoring processes/procedures, develop new on-site monitoring tools, and develop a consolidated on-site monitoring cycle ... Prior to the 2016-2017 school year, ADE will provide technical assistance to districts regarding the new desk audit and on-site processes/procedures. A consolidated four-year cycle for on-site monitoring for the 2016-2017 school year will be posted on the ADE website."100 (Florida, 2013) Law authorizes governmental units including school boards to use PPPs to develop a wide range of facilities, including schools. Reason Foundation, Annual Privatization Report 2014, p. 32; (Georgia, 2015) The Georgia General Assembly enacted social infrastructure legislation that allows governmental units including school boards to use PPPs to develop any infrastructure project on government-owned and leased land that serves a public purpose. Reason Foundation, Annual Privatization Report 2015, p. 37

Arkansas Department of Emergency Management

Summary




Use of tax dollars. Total operating expenditures at the Arkansas Department of Emergency Management (ADEM) declined significantly versus CPI (9%) in the period under review:103

FY 2009 FY 2015

General Revenue $1,587,091 $2,027,408Special Revenue $117,059 $114,765Federal Revenue $163,423,847 $32,750,433Cash Funds $26,295 $2,986,488Other Funds $43,843 $1,932,922 Total Operating Expenditures $165,198,135 $39,812,016

Definition of efficiency. ADEM defines efficiency as "the ability to deliver services to the citizens of Arkansas during times of disaster as well as ensure prompt delivery of grant funding per established guidelines."104

101 "The Arkansas Department of Emergency Management (ADEM) is Arkansas’ Homeland Security and Preparedness Agency. ADEM serves as the state’s coordination center for the capabilities necessary to prevent, protect against, mitigate the effects of, respond to, and recover from those threats that pose the greatest risk to the security of the Nation. The State’s Emergency Operations Center (SEOC) is housed at ADEM. In a disaster, the SEOC has representatives from various state agencies to ensure that assistance can be given quickly. Disasters are local. They affect us as citizens, our neighbors and our communities. ADEM works with the local governments to make sure that our communities return to normal as soon as possible.” http://www.adem.arkansas.gov/aem/102 ADEM identified three efficiencies in its response to a questionnaire: "In 2007 this agency moved from the City of Conway to the newly constructed facility located on Camp Robinson in North Little Rock. At the time of the move we also completed a reorganization to align like programs and functions into meaningful Divisions. Each year we look at the structure of the agency to determine functionality and delivery of services. 1) This past year we identified a change and implemented a move of the Arkansas Response and Coordination Center (a Branch in our Communications Division) to the Response and Recovery Division as the functions of that Branch were more in line with the direction of that Division; 2) We also changed the name of the Communications Division to Communications and Support Division to more clearly identify the role of the Division to our staff. With this newly named Division we created a Strategic Communications Branch that houses programs working directly with 911 centers and the Public Safety Broadband program; 3) Within the past 2 years was also created a Critical Infrastructure Branch which includes the staff from ADEM that supports the State Fusion Center. Through these changes we see a stronger coordination of like programs who also work with other Branches and Divisions to ensure our many programs are not overlapping. This coordination is also important to ensure the few dollars received by the agency are expended to the fullest extent to protect and prepare our state for any event."103 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx. 104 ADEM response to questionnaire.

ADEM has voluntarily eliminated three positions, reducing authorized staff from 104 to 101.105

Performance measures. ADEM provided the following information: "The measures used by this agency include: the delivery of grant funding within the guidelines established by the multiple grant programs managed at the agency; the response time to stand up the State Emergency Operations Center (SEOC) in time of disaster; the response time of our staff to provide information to citizens as well as congressional staff; and the prompt response to equipment requests from the Federal Surplus Property (FSP) program. The FSP program also uses a federal document called the NOUN report to document the effectiveness of the distribution of federal assets."106

Customer base. ADEM provided the following information: "On a daily basis our customers include the County Emergency Management Coordinators, County Judges, and liaisons from all state agencies with a role in disaster response. This identification comes from Arkansas Code Annotated 12-75-101 et.al. The ultimate customers of the agency are the state citizens who receive assistance through the resources we coordinate to provide in times of disaster as well as the monetary programs we manage for both Infrastructure and primary residences."107


Recommendations


ADEM receives a high percentage of total operating funds from federal revenue sources, though these funds have declined significantly in recent years. It would be prudent to develop a contingency plan based on a scenario of further reductions in federal revenues.

105 ADEM communication106 ADEM response to questionnaire107 Ibid.108 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Department of Environmental Quality

Summary


Strategic plan posted with efficiency reference? No Spending greater than CPI? Yes Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes110

Dollar amount from identified efficiencies? $1.2 million111

Use of tax dollars. Total operating expenditures at the Arkansas Department of Environmental Quality (ADEQ) increased at a rate (15.3%) greater than CPI (9%) in the period under review. The following chart shows funding by source:112

FY 2009 FY 2015

General Revenue $ 2,636,263 $4,687,491Special Revenue $12,898,218 $1,396,752 Federal Revenue $ 9,767,518 $7,033,818Other Funds $19,691,172 $38,770,378

109 ADEQ "is the state's main environmental protection agency, charged with protecting, enhancing, and restoring the environment...”110 ADEQ identified eight efficiencies in its response to a questionnaire: 1) The Regulated Waste Program in the Office of Land Resources conducted a lean value stream mapping process evaluation to improve the RCRA Subtitle C permit application process. This pilot project yielded a 46-day reduction in the administrative process for a major RCRA Subtitle C permit renewal; 2) ADEQ reduced the average number of days required to process air permit applications. For Title V permit applications, the Office of Air Quality reduced the average number of processing days by 209 days (34.9%). For Minor Source permit applications, OAQ reduced the average number of days by 139 days (54.5%). OAQ realized these reductions through the concerted efforts of management and staff as well as the utilization of an electronic tracking system; 3) ADEQ’s Complaints application, available for iOS and Android operating systems, allows Arkansans to report environmental complaints in real time using compatible smart phones. The application enables users to specify the type of complaint and to provide a description of the potential violation. Users may also provide the location of complaint including the county. Users may also upload pictures of the subject of the complaint, which will be geo-tagged with GPS coordinates if GPS location services are enabled on the device ...The application sends the complaint information and photos to the appropriate enforcement inspector; 4) By reviewing Department cell phone use and rate plans, ADEQ generated $94,000 in savings through less expensive rate plans and more tailored usage; 5) ADEQ recently began using the online ePortal system, which allows the online submission of permit applications and other forms. The ePortal system saves ADEQ and permittees time, paper, and postage; 6) The Office of Water Quality makes electronic reporting available to facilities required to provide Discharge Monitoring Reports. NetDMR is a Web-based tool that allows National Pollutant Discharge Elimination System permittees to electronically sign and submit DMRs and attachments; 7) ADEQ is reallocating resources to ensure more efficient use of satellite offices, limited resources for sustaining those physical locations, and personnel at those locations. ADEQ is consolidating its Melbourne and Batesville field offices and closing its Jasper field office; 8) ... An ADEQ chemist worked with CLEAResult, an energy consultant ... to replace T-8 fluorescent light bulbs in the laboratory, first floor, and kitchen areas (at HQs) with more efficient light emitting diodes. Entergy reimbursed $10,000 of the $13,000 cost. The LEDs emit significantly more light than the T-8s fluorescent light bulbs; the number of lamps was cut in half. ADEQ should save $6,000 to $8,000 per year."111 ADEQ estimates "annual savings of approximately $698,722 which resulted from actions taken to reduce operating cost. From FY15 to end of FY16 there was an estimated payroll savings of approximately $674,000. There is an estimated future annual appropriation savings of approximately $466,953 based on the voluntarily reduction of positions that will take effect FY18." 112 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Total Operating Expenditures113 $44,993,170 $51,888,439Definition of efficiency. ADEQ defines114 “efficiency" as achieving ADEQ’s mission—to protect, enhance, and restore the natural environment for the well being of all Arkansans —while minimizing the unnecessary expenditure of funds, time, materials, and energy. We are working to identify opportunities to reduce duplication, review program effectiveness to eliminate waste, lean processes to increase timeliness, and to minimize rework for agency and regulated community through permit appeals and regulatory uncertainty.

ADEQ has voluntarily eliminated 19 positions, reducing authorized staff from 420 to 401.115

Performance measures. ADEQ reported116 four performance measures:

Inspections in the Office of Air Quality, the Office of Water Quality, and the Office of Land Resources are tracked to ensure that they are completed in a timely manner and within deadlines.

The Office of Air Quality tracks the average number of days required to process Air Permit Applications (both Major and Minor Permits) to ensure expeditious and timely processing.

The Office of Land Resources tracks a number of metrics to ensure efficient resources allocation. The Mining and Land Resources Administration tracks Mining permit applications to ensure permits are issued within 180 days of receipt. The Petroleum Tanks Program and Enforcement division tracks the amount of environmentally impacted land that has been returned to productive use as a result of successful corrective actions led by that division.

The Regulated Waste Program tracks each permit application to ensure that administrative review is completed within 10 days of receipt. Each Class I landfill permit modification request is tracked to ensure approval or denial within 30 days of receipt. The Regulated Waste Program also

113 ADEQ reports "adjustments to funding categories were made. Total Operating Expenses also increased during this period due to increased environmental cleanup efforts at contaminated sites."114 ADEQ response to questionnaire. ADEQ is undergoing "an extensive reorganization designed to realize numerous internal efficiencies, which include consolidating human and capital resources, increasing inter-divisional cooperation, and generating budgetary savings. The goals of this restructuring include streamlining work processes across multiple divisions and making the Department even more responsive to those it serves. ADEQ will continue to evaluate its organizational structure to seek opportunities to operate more efficiently and effectively." ADEQ communication: Beginning July 1, "ADEQ’s Office of Law and Policy developed a dedicated Efficiency Office with a motto of “What Is Measured Is Managed”. The initiative reflects the mission of the agency to be good stewards of the environment while also being good stewards of tax-payers’ dollars. Earlier this year ADEQ completed its first Satisfaction Survey, reaching out to Arkansans by posting a link to the survey on our website, utilizing Twitter, Facebook, and other media. Responses were solicited from all associations and groups interacting with ADEQ as well as visitors to our facility. A total of 423 surveys were received; 113 completed by Legislators and Constitutional Officers. We will use the feedback received – both positive and negative – to improve efficiency, effectiveness, and communications."115 "... Beginning in FY18, July 1, 2017." ADEQ communication116 ADEQ response to questionnaire

tracks permit renewals and new permit applications within the program’s purview to ensure that they are approved or denied within 360 days or less of receipt.

Customer base. "ADEQ’s customer base," according to officials, "consists of the citizens of Arkansas and the regulated community with whom we work to ensure speedy and accurate permitting."117


Recommendations


ADEQ’s Complaints app, available for iOS and Android operating systems, should be studied by other state agencies to determine if other apps might advance efficiencies. The Environmental Council of States Executive Committee awarded ADEQ a State Program Innovation Award for the app in 2015.

ADEQ's consolidation of its Melbourne and Batesville field offices, as well as the closing of its Jasper field office should be studied by other state agencies and adapted if economically feasible.

117 ADEQ response to questionnaire118 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Department of Finance and Administration

Summary

Mission Statement cites efficiency? No Strategic plan posted with efficiency reference? No Spending greater than CPI? No119

Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes120


Use of tax dollars. The Arkansas Department of Finance and Administration's (DFA) total operating expenditures increased 10% versus CPI (9%) in the period under review. The following chart shows funding by source:121

FY 2009 FY 2015

General Revenue $19,701,418 $11,154,223 HSC/MCF Funds $142,510,180 $144,539,119Special Revenue $42,951,529 $64,841,689Federal Revenue $42,323,012 $9,692,157Cash Funds $1,036,852 $9,234,929Other Funds $646,843,147 $746,473,705Total Operating Expenditures $895,366,137 $985,935,822

The following chart shows revenues without ”pass-through" funds:

General Revenue $16,327,949 $16,662,279State Central Services $138,549,798 $144,539,119Special Revenue $1,276,449 $431,897Revolving Funds $11,661,729 $8,909,025Federal Revenue $32,800,000 $38,511,854Cash Funds $791,692 $513,057Total Operating Expenditures $201,410,725 $209,567,230

119 DFA provided spending data that showed operational expenses increased 4% in the period under review (see Chart).120 DFA identified two efficiencies in its response to a questionnaire: "At any point in time, the Department of Finance and Administration has any number of projects underway whose common goal is increased organizational efficiency. These include new applications needed to improve the services provided by the agency or improve the security of data collected as a result of those services. Two recent examples include 1) the Arkansas Integrated Revenue System (AIRS) which was first introduced in September 2012 and has recently completed rollout. The intent of the project was increased efficiencies across the State and we believe this goal has been achieved. Similarly, DFA-OIS is currently working to roll out 2) the Employee Self Service system, with the goal of allowing individuals to perform routine requirements of state employment – such as entering working time or checking on pay stubs – from their phones. This will eliminate the need for additional staff and other resources which are currently necessary to meet these operational requirements."121 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Definition of efficiency. DFA has not adopted "a formal definition of efficiency."122 Officials note the DFA-Office of Accounting has issued rules, contained within its Financial Management Guide, that require efficiency and internal control, as defined below:

“R1-19-4-505Internal Control and Ethics Requirements State government agencies must have an established system of internal control that provides reasonable assurance that objectives have been achieved in: 1) the effectiveness and efficiency of operations, 2) the reliability of financial reporting and 3) compliance with applicable laws and regulations. Internal Control is defined as a process, effected by an entity’s board of directors, management and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories: 1. Effectiveness and efficiency of operations, 2. Reliability of financial reporting, 3. Compliance with applicable laws and regulations. Although this formal definition refers to internal control as a process, it should be viewed as a series of actions that permeate the entire State Government of Arkansas. Internal controls exist in the basic management processes of planning, executing and monitoring. It should not be viewed as an add-on to these basic management processes but should be viewed as an integral part of them and should be placed at strategic points in these processes to ensure that objectives are achieved.”123

DFA has voluntarily eliminated 55 positions, reducing authorized staff from 2,601 to 2,546.124

Performance measures. DFA "uses a wide variety of performance measures to define efficiency and identify potential opportunities to increase efficiency. Due to the varying nature of the work performed by the different divisions of DFA, each division relies on different reporting measures to track performance."125 These include the following:

On an agency-wide basis, the DFA-Office of Administrative Services oversees the staffing levels of the agency and tracks the number, type and salaries of positions within the agency necessary to meet DFA’s mission. Similarly, DFA-OAS tracks operational expenses, budgets and appropriation, procurement and other costs associated with the operations of the agency.

Within DFA, individual divisions rely on different sources of information to track efficiency. For example, the Revenue Department is primarily – but not exclusively – dedicated to the collection of State tax revenue. These revenues are used to fund future state operations, and the effectiveness

122 DFA response to questionnaire. 123 DFA Financial Management Guide, p. 6124 DFA communication125 DFA response to questionnaire

of Revenue Department Operations can be partially gauged by overall collections. These collections are projected in the Official Revenue Forecast of the State, which in turn serves as a primary planning documents for those crafting the State budgets. Leadership within DFA and the Revenue Department specifically tracks collections against this forecast, and must be in a position to warn policy makers of any unexpected events which may alter or lower future collections. If collections are less than expected, DFA can and will review existing operations and determine whether changes are necessary to ensure stronger collections in the future.

The DFA–Office of the Arkansas Lottery releases monthly reports on overall sales of lottery tickets, total amount of monthly proceeds and the number of scholarships funded as a result. These reports are the subject of at-time intense scrutiny both from within DFA and from without.

DFA–Office of Child Support Enforcement is required to make annual reports to the Federal government regarding operations. These reports include the data necessary for the awarding of an efficiency rating, which is a ratio of the amount collected by OCSE versus the amount expended. Every state is assigned a rating, and ratings are used to determine the amount of incentive earnings made available to individual child-support operations annually.

DFA–Alcoholic Beverage Control – Enforcement requires weekly and monthly reporting from all agent detailing the number of inspections performed, citations issues and other actions taken by the agency. These reports are then compiled into annual reports.

Customer base. DFA reports its customer base "varies greatly." Different Revenue Department divisions, for example, "serve different customer bases. The DFA-Office of Drivers Services provides drivers licenses and state identification cards to Arkansans and has evolved over time to becoming the State’s source for identification documents. The DFA Office of Motor Vehicles provides services for the titling and licensure of vehicles within the State. Offices dedicated to the administration of state taxes – including Excise, Income and Audit – serve different, potentially overlapping customer bases. These customer bases may overlap with those served by other divisions of DFA, including the Office of Child Support Enforcement. The Office of the Lottery, conversely, serves a large cross section of Arkansas society in terms of those individuals purchasing lottery tickets and products. For those divisions under the umbrella of Management Services – including the Offices of Accounting, Budget, Procurement, Personnel Management, Intergovernmental Services, Information

Systems, and Employee Benefits Division – the primary customers are other state agencies and the individuals who work for them."126

Efficiencies in states in region. One identified by volunteer.127

Recommendations

DFA interacts with and drives processes for a large proportion of Arkansas state government,128 including revenue and personnel management. The department should serve as a catalyst for advancing future efficiency initiatives within state government.129


The relationship between taxpayers who pay their taxes in a timely manner and those who do not should be clarified by DFA.

The feasibility of consolidating revenue offices should undergo formal review. The review should include multi-year customer utilization data.

The collection of outstanding accounts receivable130 should be privatized if the department is unable to reduce the net balance by 5%.

126 DFA response to questionnaire127 Florida started a pilot program to privatize driver’s license renewals in two locations, with the possibility of expanding the initiative statewide. Reason Foundation, Annual Privatization Report 2014, pp. 52-53128 DFA's Total Operating Expenditures approached $1 billion in FY 2015, trailing only the departments of Human Services ($7,129,762,956) and Education ($3,457,588,679).129 A separate report commissioned by the Policy Foundation analyzed DFA's core processes, as well as opportunities for efficiency that could catalyze statewide improvements. Nine recommendations emerged from the report: "1) Develop a statewide strategic plan to align budgets and operations; 2) Develop a centralized risk management function to appropriately identify and manage risk, especially procurement risk; 3) Re-evaluate organizational alignment and functions; 4) Transform the talent of the State through a human resources strategic plan; 5) Modernize the State's compensation and benefits; 6) Conduct deep process analysis to optimize accounting and tax assessment/collection processes necessary to execute the State's mission; 7) Automate processes to allow the State and customers to use self-service options; 8) Enhance Information Systems governance and develop a centralized shared services and infrastructure architecture plan; and 9) Enhance innovation and collaboration, focused on the use of digital technology to increase efficiency."130 The problem predates the current administration. As of November 26, 2014, DFA estimated the net accounts receivable balance at $287.5 million. As of May 31, 2016, DFA estimated the balance at $310.4 million using the following chart:

(Gross) Total systems account receivable balance: $1,423,985,860.47(Less) Non-filer estimated assessments: $623,038,919.86 (Adjusted) Adjusted accounts receivable balance: $800,946,940.61(Less) Not ready for collections $123,282,811.27(Less) Legal hearings $17,000,410.25(Less) Inactive $350,204,847.87(Net) Net Accounts Receivable Balance $310,458,871.22

Arkansas Department of Health

Summary



Spending greater than CPI? Yes Performance measures? Yes Customer base identified? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes133


Use of Tax Dollars. Total operational expenditures at the Arkansas Department of Health (ADH) increased 13.8% versus CPI (9.0%) in the period under review. The following chart shows funding by source:134

FY 2009 FY 2015

General Revenue $53,603,388 $84,231,436Special Revenue $20,086,155 $19,543,458Federal Revenue $138,627,539 $160,813,331Cash Funds $171,447 ---Other Funds $112,876,014 $105,799,545Total Operating Expenditure $325,364,543 $370,387,770

131 “Mission Statement-To protect and improve the health and well-being of all Arkansans.“ Vision Statement-Optimal health for all Arkansans to achieve maximum personal, economic and social impact." “What is public health? One definition -from a 1988 report by the Institute of Medicine’s ‘The Future of Public Health’ – is this: ‘Public health is the science and the art of preventing disease, prolonging life, and organizing community efforts to do the following: keep the environment clean, control communicable infections, educate individuals in personal hygiene (like hand washing for example), organize medical and nursing services for the early diagnosis and treatment of disease, and develop the social machinery to ensure everyone a healthy standard of living.’” “To say that another way, public health is everything the Arkansas Department of Health (ADH) does to protect and improve the health and well-being of all Arkansans – more than 100 services provided statewide by public health professionals to assure that your water is safe, your children have their immunizations, your restaurants are safe and your birth certificate is correct – to name just a few.”132 Arkansas Department of Health Strategic Map (CY 2016-2919): http://www.healthy.arkansas.gov/aboutADH/Documents/StrategicPlan2016.pdfTobacco: http://www.healthy.arkansas.gov/programsServices/tobaccoprevent/Documents/StratPlan/StratPlan2014-2019.pdfRural Health: http://www.healthy.arkansas.gov/programsServices/hometownHealth/ORHPC/Documents/RuralHealthPlan.pdf133 The department identified five efficiencies in response to a questionnaire. 1) "The Department operates the largest In Home Services Agency in the State and competes with the private sector. Because of sustainability concerns, the Department retained a consultant to review the operations and make recommendations. After approval from the Governor to proceed, the Department is currently completing a transition process to transfer the Agency to the private sector. After this process is complete, the Department will have 2000 fewer employees (600 regular and 1400 contract employees); 2) Collaboration with UAMS to use telemedicine for high risk pregnancies; 3) Using Video Directly Observed Therapy App on a Smart Phone for tuberculosis patients to verify compliance with medication instead of having a ADH Disease Intervention Specialist go in person to observe; 4) WIC kiosks to allow clients to verify educational requirements instead of scheduling appointments; and 5) The redesign of website to make it more citizen/user centric as opposed to replicating organizational structure." For additional information on Item No. 1 see: "In-home state-run care unit now sold: Health staff gets portion of $39M." Arkansas Democrat-Gazette, August 2, 2016, 1B134 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Definition of efficiency. ADH defines efficiency as "being able to deliver an extensive list of effective public health services and health care across the entire state while working within budget limitations."135

ADH estimates a reduction of 2,000 employees as a result of the in-home services privatization.136

Performance measures. ADH reported "a Quality Assurance area that has various metrics (used) to evaluate ... quality, which includes efficiency, for each service that ADH provides. If an issue is found by the Quality Assurance area, they will work with the individual and/or department to correct the immediate issue as well as work to educate staff to prevent future issues from occurring."137

Customer base. ADH stated it "does provide certain preventive health services such as immunizations, sexually transmitted infections, tuberculosis, family planning, well woman exams and maternity across the state. The Department engages local stakeholders through the Home Town Health Initiative to improve health outcomes. The Department is also responsible for a variety of state and federal programs for such as Women Infant and Childhood Nutrition (WIC), Clean Drinking Water Act, Food Safety, Vital Statistics, Trauma System, Hospital Preparedness and Disease Surveillance."138


Recommendations


A future Efficiency Review should identify efficiencies in states outside the region, and focus on ADH's five largest program areas.

135 ADH response to questionnaire136 ADH communication137 ADH response to questionnaire138 Ibid.139 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Department of Higher Education

Summary



Spending greater than CPI? No142

Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes143


Use of tax dollars. Total operating expenditures at the Arkansas Department of Higher Education (ADHE) decreased versus CPI (9%) in the period under review. The following chart shows funding by source:144

FY 2009 FY 2015

General Revenue $3,291,152 $3,440,731Special Revenue --- ---Federal Revenue $12,993,691 $8,977,432Cash Funds $273,919 $110,341Other Funds $2,127,350 $538,486Total Operating Expenditures $18,686,112 $13,066,990

Definition of efficiency. ADHE defines efficiency as follows: "Delivering the essential and required services of the department in an effective manner while utilizing the least possible resources. In other words, delivering quality while minimizing inputs."145

140 "The mission of the Arkansas Department of Higher Education is to advocate for higher education; to promote a coordinated system of higher education in the state; and to assist each of the publicly and locally supported institutions of higher education in the state in improving the delivery of higher education services to the citizens of Arkansas." http://www.adhe.edu/about-adhe/about-the-agency/141 The department's Master Plan is posted at: http://www.adhe.edu/about-adhe/master-plan/142 Higher Education Department grants, a separate line item, grew more than CPI in the same period, expanding from $46,071,201 (2009) to $52,719,325 (2015). The General Revenue portion increased from $34,661,199 (2009) to $40,017,466 (2015).143 The department identified four efficiencies in its response to a questionnaire: 1) " Over the last year, we reviewed all positions in the department. Several positions have been eliminated, some will be eliminated when retirements occur and others have been changed to match operating priorities; 2) We have eliminated one outsourced contract and will end a second contract by July 2016. Outsourced duties will be absorbed by existing employees; 3) One of three fleet vehicles is being eliminated; 4) Increasing automated processes to eliminate repetitive manual tasks. For example, data entry of student transcript information."144 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx145 ADHE response to questionnaire.

ADHE has voluntarily eliminated 3 positions, reducing authorized staff from 35 to 32.146

Performance measures. ADHE provided the following statement: "We seek to maximize value to colleges and universities, students, policy makers, and taxpayers by delivering services that lead to increased educational attainment in the state. We also recommend and implement performance measures for colleges and universities related to the same goal of increased educational attainment."147

These measures are less detailed than those in ADHE's Master Plan, which cites "the long-term objective to reach the 2025 goal of a 60% post-secondary attainment rate in Arkansas, increasing from the current estimate of 43.4%. By 2020, we will reduce the educational attainment gap in Arkansas by increasing the number of postsecondary credentials by 50% over the 2013-2014 academic year levels; increasing the number of certificates awarded to 19,200; associate’s degrees to 12,700; and bachelor’s degrees to 19,900."148 To achieve these goals, a new outcomes-based funding formula announced this year incentivizes completing a college degree or certificate, rather than enrollment. Arkansas would become the fifth state to adopt such a formula if policymakers approve the idea in 2017.

Customer base. ADHE provided the following statement: "All post-secondary students enrolled in public, private or for-profit colleges and universities operating in Arkansas are our customers. To successfully serve those students, we also serve colleges and universities, policy makers, and taxpayers."149


Recommendations


New strategies are needed to achieve Arkansas' ambitious post-secondary attainment goals. Public colleges and universities in other states have authority to sponsor charter schools.151 One reason for this idea is that students become aware of post-secondary options at an

146 ADHE communication147 The department notes "performance and efficiency are different concepts. Efficiency: We seek to deliver these results within budgetary restraints. From actual spending in FY15 to projected spending for FY17, we expect a budget reduction of no less than 6%. We continue to add services to students and to institutions while reducing operating expenses. Several statewide initiatives have been added over the past 6-8 months without adding costs." 148 ADHE, Closing The Gap 2020: A Master Plan For Higher Education In Arkansas, http://www.adhe.edu/institutions/master-plan/The U.S. Department of Education reported in 2012 that Arkansas recorded a 28.6% attainment rate in 2010.http://www.ed.gov/news/press-releases/new-state-state-college-attainment-numbers-show-progress-toward-2020-goal149 ADHE response to questionnaire150 Reason Foundation, Annual Privatization Report 2014, 2015

earlier age. Another is that the policy increases competition within the educational sector. The department should encourage this innovation.

Arkansas Department of Labor

Summary



Dollar amount from identified efficiencies? $60,000+

Use of tax dollars. Arkansas Department of Labor (ADL) total operating expenditures increased (1.6%) less than CPI (9%) in the period under review. The following chart shows funding sources:154

FY 2009 FY 2015

General Revenue $2,798,426 $3,743,035Special Revenue --- $1,420,934Federal Revenue $1,229,885 $1,154,788Cash Funds $129,212 $167,693Other Funds $2,227,608 ---Total Operating Expenditures $6,385,131 $6,486,450

Definition of efficiency. The Arkansas Department of Labor (ADL) defines efficiency as "using the most cost-effective and productive means to achieve our

151 Central Michigan was the first public university in the U.S. to authorize a charter school, and currently authorizes 62 schools. http://www.thecenterforcharters.org/ 152 Labor is among the handful of Arkansas departments that includes the word 'efficiency' in its mission statement: “The Arkansas Department of Labor was given the responsibility of enforcing the labor laws of the state in 1913. Today, the mission of the Arkansas Department of Labor is to foster, promote, and develop the health, safety and welfare of the wage earners of Arkansas by providing services and enforcing laws to improve working conditions and enhance their opportunities for safe and profitable employment. Since 1991 the Department has increased in both productivity and efficiency as we have continuously endeavored to improve processes and public services. We look forward to serving the workforce of Arkansas even more effectively in the future.”153 ADL identified five efficiencies in its response to a questionnaire: 1) "The agency’s finance/personnel division has been reorganized to implement best practices and a more comprehensive process for receiving, receipting and deposit of funds collected by the agency; 2) Accounts receivable procedures have been developed and implemented to provide more effective/efficient service to constituents, service providers, vendors and employees; 3) The Information and Technology team executed an initiative to purchase Laserfiche modules that will improve efficiency by using less paper and reducing costs. The implementation of this document imaging technology has increased agency-wide efficiency in the processing of field reports, filing of legal documents, processing of wage claims and employee time reports. 4) Field staff assigned outside of the Central Arkansas area now work from home allowing the agency to consolidate office space resulting in a savings of $60,000 annually for rental costs. 5) A portion of the first year of savings was used to improve technology for field staff with one-time purchases. This will result in ADL have savings each year on office space. All field staff persons have been assigned electronic devices (i.e. smart phones, and laptops) to increase efficiency in making reports and accessing administrative tools needed for daily operations."154 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

agency’s mission, which includes the use of technology by providing updated software and hardware to all employees, consolidation of space to save tax-payer dollars and the continuous endeavor to improve processes and public services for Arkansans."155 ADL has voluntarily eliminated five positions, reducing authorized staff from 85 to 80.156

Performance measures. ADL's performance standards for employees "address efficiency in the performance of their duties which includes effective planning, use of resources, continuous education, awards and recognition for safe work environments, as well as input from employees to determine how best the agency is able to serve Arkansans without creating additional regulations or monetary requirements."

Customer base. Department officials note ADL "was given the responsibility of enforcing the labor laws of the state in 1913. We identify as our customer base as the wage earners of Arkansas as well as businesses and manufacturers by providing services and enforcing laws to improve working conditions and enhance opportunities for safe and profitable employment."


Recommendations

The department should develop a strategic plan that includes a section on efficiency. The strategic plan should be posted online.

155 ADL response to questionnaire156 ADL communication157 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Department of Parks and Tourism

Summary


Strategic plan posted with efficiency reference? No Spending greater than CPI? No Performance measures Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes159


Use of tax dollars. Spending by the Arkansas Department of Parks and Tourism decreased161 in the period under review. Total operating expenditures declined 1.3% versus CPI (9.0%). The following chart shows funding sources:162

FY 2009 FY 2015

General Revenue $21,938,162 $24,538,750Special Revenue $38,821,697 $27,843,424Federal Revenue $7,121,983 $166,298Cash Funds $24,942,539 $30,285,909Other Funds $7,071,992 $15,750,069Total Operating Expenditures $99,896,373 $98,584,451

Definition of efficiency. Parks and Tourism defines efficiency in two ways: "(1) How can we be the best stewards of the taxpayer's dollar; and (2) since our department is also a revenue-producer, how can we best serve the taxpayer/public to bring in more revenue?

The department did not report any voluntary reduction in authorized staff.

158 Amended to include reference after questionnaire.159 The department identified four efficiencies in response to a questionnaire. They are listed as follows: 1) Putting a greater emphasis on public-private partnerships to stretch taxpayer dollars. In Tourism, that means "value added" media through our Arkansas broadcast and print partners and through the deals secured through our ad agency CJRW. In Parks, that means finding private entities that could assist in building and maintaining our trails system, among other possibilities. 2) Creating a culture in which the concept of Efficiency is applied in everything we do, be it saving money on paper/printing or reconsidering some of our hiring practices. 3) Moving to consolidate our biggest vendor contracts with our advertising agency (CJRW) and our web designer (Aristotle) into one contract when both are up for renewal after the coming FY. Ultimately, this will result in one vendor handling marketing/advertising and web design, which, given the way advertising and marketing are done in 2016, simply makes sense. It will be more efficient from a work-flow standpoint and it should result in significant savings when the contract is put up for bid.4) Taking an A-to-Z look at the possible need to restructure, especially on the Parks side, which consumes the vast majority of ADPT budget. The idea is to restructure in a way that makes better use of our resources, including employees, better serves our customers, and provides the best use of taxpayer dollars."160 The department identified $105,000 from "unfilled positions" but noted some of these savings have "gone to increase salaries for staff whose responsibilities have increased."161 The department generates revenues.162 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Performance measures. The department, in its response to a questionnaire, cited several performance measures. "We are able to define our efficiency by looking at the bottom line. In the case of the Parks division, that means revenue produced from lodge parks, restaurants, gift shops, etc. In the case of the tourism division, that equates to revenues brought in through the 2% tourism tax on hotels/motels, marinas, etc. (primarily "heads in beds"). That tax is a pretty direct reflection of visitors/tourists to Arkansas and thus a reflection of the success of the tourism division's promotional and marketing efforts. Keep Arkansas Beautiful, also under the ADPT umbrella, is a three-person operation funded by a small percentage of the Amendment 75 conservation tax. By its very nature, it must be efficient to operate."

Customer base. Parks and Tourism defines its customer base as "the users of our 52 state parks -- be they overnight visitors, day-use visitors, hikers, bikers, fishermen; these are targeted through promotions and marketing. On the tourism side, our customer base are visitors -- they can be in-state travelers, of course, but we're primarily targeted those tourists from outside the state who will spend the night or several in Arkansas."

Efficiencies in states in region. Kentucky's Tourism, Arts and Heritage Cabinet issued an RFP seeking a developer-operator for a new General Burnside Island State Park lodge.163 Arkansas Parks and Tourism staff, in interviews, advised the department may review the future of some state parks that may be underutilized in terms of customer visitation-usage, and require an especially disproportionate operational expense. The idea of shedding a state park to nonprofits engaged in conservation or historical preservation was suggested to staff should that situation come up for consideration. Parks and Tourism officials have not considered this option.164

Recommendations

The Parks and Tourism mission statement should be amended to include efficiency as a policy goal, and a strategic plan should be developed and include a section on efficiency. Both should be posted online.

The feasibility of shedding state parks to non-state nonprofit and/or government units should undergo formal review if they are characterized by low multi-year customer utilization.

163 Reason Foundation, Annual Privatization Report 2015, p. 40164 Shedding defines the process whereby a public sector unit sells its assets or services which are then undertaken by one or more nonprofit or private sector units. Public-private partnerships are another option. The Reason Foundation, a California think tank reports budget pressures forced the Golden State to "become the first state in the modern era" to enter into public-private partnerships for five state parks in 2012.

Arkansas Department of Veterans Affairs

Summary


Strategic plan posted with efficiency reference? No166

Spending greater than CPI? Yes Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? Yes Department-identified efficiencies? Yes167


Use of tax dollars. Total ADVA operating expenditures grew more than CPI (9%) in the period under review:168

FY 2009 FY 2015

General Revenue $2,129,282 $2,451,593Special Revenue --- $12,500Federal Revenue $3,822,776 $1,021,769Cash Funds $3,260,009 $8,119,719Other Funds $85,000 ---

165 "Mission: The Arkansas Department of Veterans Affairs (ADVA) serves Arkansas Veterans, and their eligible dependents,

through advocacy and education to access state and federal benefits, high-quality long-term nursing care and burial honors." http://www.veterans.arkansas.gov/about-us166 The department has developed a strategic plan but it is not posted online.167 The department identified 12 efficiencies in its response to a questionnaire: 1) A strategic plan to ensure "we are focusing our resources and efforts toward the needs of Veterans in alignment with our legislative mandate. We worked in collaboration with internal and external stakeholders and are currently measuring our performance against the plan and related operational goals;" 2) Reallocation "of existing agency positions to areas of greatest need, through comprehensive needs analysis, in alignment with our strategic plan;" 3) Utilization of "existing resources in innovative ways and empowering counties to contribute to the effective delivery of services to Veterans" to meet increased demand. Nine regional ADVA Veterans service offices (Fayetteville, Mountain Home, Fort Smith, Russellville, Jonesboro, Forrest City, Hope, Monticello and North Little Rock) were created. Previously, all ADVA VSOs were stationed at Ft. Roots in North Little Rock. We utilized donated funds to establish regional offices and leased a small amount of space in (primarily) DWS offices at low cost;" 4) Establishment of "a formal training program to train and accredit county Veterans’ service officers located ... in order to improve counties’ ability to address Veterans’ needs, (and) improve consistency of service delivery ... improving the quality of services provided to Arkansas Veterans;" 5) Creation of "a new agency website using donated funds to increase the effectiveness of the outreach function. http://veterans.arkansas.gov/ 6) Increased "agency financial reporting efficiency through the creation of semi-automated reports, also increasing financial transparency by publishing key financial information to staff on a daily basis with only a few keystrokes;" 7) Creation of "a semi-automated travel approval process with automated workflow, to increase oversight and ensure effective controls over travel spending;" 8) Implementation of "new fiscal processes, procedures and controls in order to mitigate risks and improve the agency’s fiscal performance;" 9) A complete fiscal turnaround at the State Veterans Home at Fayetteville. "In FY14, the home recognized a net loss of $1.06M. In FY15, the home recognized $916K net income. The home has positive cash flow averaging $80K per month; 10) Capture of key performance metrics through the Dashboard Initiative; 11) Early stage implementation of Electronic Health Record systems in FY17 to "drive significant operational efficiencies, offer better insight into resident health status, improve information quality and greatly reduce the risk of errors and omissions in care delivery;" 12) Elimination of 7 agency positions at the State Veterans Home at Fayetteville (via) public-private partnerships for delivery of maintenance, grounds keeping, housekeeping and laundry services while in-sourcing the food service - in order to improve the quality of food provided to residents in our care." Accomplished within the existing budget.168 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx Total expenditures declined from 2014 to 2015.

Total Operating Expenditures $9,297,067 $11,605,581Definition of efficiency. ADVA defines efficiency as "the cost-effective delivery of high-quality services within the scope of our mission. We seek to avoid waste, especially financial waste, and to improve the quality of services provided through innovative, cost-effective solutions."169

ADVA has "increased the accessibility of its services to Veterans and their families by opening six of eight additional district Veterans Service Offices throughout Arkansas within a five-month period, and increasing the number of agency Veteran Service Officers from nine to fourteen with no increase to agency authorized staffing levels or budget."170

Performance measures. "For the first time in the agency’s history, we have identified and are tracking performance measures. We are in the process of developing a performance metrics “dashboard” which will evolve as we improve the quality of our data and develop analytics to improve insight into our programs ... we maintain a number of performance metrics, including but not limited to: average burial cost (by Cemetery), average net income per burial, general revenue per burial, average cost of care per resident, average net income per resident, direct care staff to resident ratio, staff to resident ratio, home occupancy rate, average resident census, average monthly cash flow, average monthly VA Income, 7O% SCD days of care provided, average Veteran resident census, a number of resident health metrics, # Veterans seen (Claims & Appeals office)."171

Customer base. ADVA defines its customer base as "the 250,000 Veterans and their dependents throughout the State of Arkansas."172


Recommendations


Public-private partnerships have the potential to increase efficiencies at other state departments. ADVA's use of public-private partnerships should be recognized and explained to administrators at other state departments to reduce silos.174

169 ADVA response to questionnaire. 170 ADVA communication: This policy was "accomplished in part by partnering with the Department of Workforce Services and other public entities for low-priced office space; and reassigning other agency positions to this function."171 ADVA response to questionnaire172 Ibid.173 Reason Foundation, Annual Privatization Report 2014174 The National Council for Public-Private Partnerships defines a public-private partnership (P3) as "a contractual arrangement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility." The Reason

Arkansas Department of Workforce Services

Summary




Use of tax dollars. Total operating expenditures at the Arkansas Department of Workforce Services (DWS) declined in the period under review. The following chart shows funding by source:177

FY 2009 FY 2015

General Revenue $ 2,708,398 ---Special Revenue --- ---Federal Revenue $857,162,275 $28,841,330Cash Funds --- $305,635,210Other Funds $ 2,950,629 $125,781,922Total Operating Expenditures $862,821,302 $460,258,462

Foundation has published extensively on the subject in areas including corrections and transportation infrastructure.175 DWS Vision: To strengthen the economic well-being of all Arkansans and their communities. Mission: To enable Arkansas' workforce to compete in the global economy by linking a comprehensive array of services for employers and job seekers.176 DWS identified seven efficiencies in its response to a questionnaire: 1) "(UI) The Unemployment Insurance program recently implemented the Claims Processing Hot Line. The purpose of the hot line is to better leverage UI staff in the local offices through the use of a virtual call center. Implementation of the hot line has allowed DWS to reduce UI staff in the field through attrition by approximately 30 full-time equivalent positions. Estimated savings: $1.5 million; 2) (Legal) Legal began a comprehensive effort in 2015 to review all agreements in the agency prior to Departmental approval, which involves systematic approvals by agency departments. The FIRE Unit implemented a wage response program to improve employer responses to investigations in 2016 designed to increase the response rate, as well as increase the number of investigations without increasing personnel; 3) (FMAS) In July 2016, DWS will be utilizing a new software package that will enable the agency to house data and create reports in a faster, more efficient manner; 4) (TANF) (Stewardship of Public Resources) Effective Feb. 1, 2014, Arkansas placed restrictions on Point-Of-Sale (POS) devices, prohibiting the use of EBT card cash benefit transactions at inappropriate locations such as liquor and tobacco stores, casinos, gambling establishments and establishments that provide adult entertainment. These restrictions were required per Section 4004 of the Middle Class Tax Relief and Job Creation Act of 2012. Efforts are underway to also restrict ATM transactions occurring at these locations. Cardholders who attempt EBT transactions at these restricted locations will have their transactions blocked; 5) (Drug Testing) The Arkansas Legislature enacted a law requiring suspicion-based drug testing for applicants and recipients of Temporary Assistance to Needy Families (TANF). ADWS will implement the suspicion based drug testing by April 1, 2016. Those who test positive will receive substance abuse treatment and employment skills training. By testing those who are suspected of using illegal controlled substances and providing treatment, TANF will assure cash assistance is used

for basic needs to care for a child in the home, not on drug use. 6) (Fraud Prevention) During state fiscal years 2012 -2014, fraud prevention and detection program was developed for the TEA program; and 7) (EA) ADWS has been working for the last year to implement the Workforce Innovation and Opportunity Act (WIOA), which will better coordinate services to both employers and jobseekers that are provided from thirteen workforce programs operated in three state agencies in the state."177 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Definition of efficiency. DWS provided178 the following information: "Legal- Being productive with minimal waste or effort; elimination of duplication but with cost-effective service. FMAS-Our department defines efficiency as the use of standard procedures and systems to provide accurate and valuable information in a timely manner to our internal and external customers, at minimal costs to the agency and the state. TANF-Performance of all programs to serve clients and achieve established performance goals, at a minimum. EA-Elimination of duplication and streamlining of services to customers through coordination with other workforce system partners."

DWS has voluntarily eliminated 46 positions, reducing authorized staff from 780 to 734.179

Performance measures. DWS reports "each employee has a personalized performance plan, specific to work performed, which enables him/her to strive for excellence in all areas of performance standards and expectations. Examples of areas evaluated are: budgeting, financial reporting, and accounting entries."

Customer base. Department officials state the UI customer base "includes external customers" such as workers and employers, and political/governmental organizations. "Internal customers include all DWS employees." FMAs have "two (2) different customers with which we identify, external and internal. External customers are those from outside of the agency for which we provide information to or seek information from, in order to assist us in managing our programs. The other customer is internal; those are our own Department of Workforce Services staff, whether they are in central or local offices."


Recommendations

The department should develop a strategic plan that includes a section on efficiency. The strategic plan should be posted online.

DWS compiles Arkansas labor market information, and should expand its monthly nonfarm payroll employment report to include private industry sectors engaged in coding and technology-related services. The information should be incorporated into economic development initiatives to reduce silos.

178 DWS response to questionnaire179 DWS communication, September 12, 2016. "On 1/31/15, we had 780 full time employees, as of 9/8/15, we employee 734."180 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Economic Development Commission

Summary


Strategic plan posted with efficiency reference? No Spending greater than CPI? Yes Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes182


Use of tax dollars. Total operating expenditures at the Arkansas Economic Development Commission (AEDC) increased 28.5% versus CPI (9%) in the period under review. The following chart shows funding by source:183

FY 2009 FY 2015

General Revenue $10,003,180 $10,450,829 Special Revenue --- ---Federal Revenue $24,724,310 $33,289,934Cash Funds $735,100 $1,308,071Other Funds --- $540,546Total Operating Expenditures $35,462,590 $45,589,380

181 The Economic Development Commission lists 'Fiscal Responsibility' as a "core value." The commission's website states, "We are stewards of our citizens’ money and time." http://www.arkansasedc.com/about-us182 The commission identified seven efficiencies in its response to a questionnaire: 1) The merger of the Science and Technology Authority and Rural Services with AEDC has presented the state with an opportunity to increase operational efficiency of all three agencies through integration and restructuring. AEDC is developing strategies to reach this goal that are in line with its core values of teamwork and fiscal responsibility; 2) The strategy AEDC has recently implemented is that of promoting and maintaining professional staff willing to work beyond the scope of current duties, and offering market-competitive salaries to staff who will find creative ways to exceed expectations and deliver results. Utilizing attrition and recent retirements, AEDC is opting to leave positions vacant and redistribute those job responsibilities to existing staff. This is exemplified by our agency’s consolidation of both divisions and personnel. Divisions have decreased from 19 to 13, and personnel has dropped from 112 at FY15 year-end to a staff level of 98 today while maintaining an authorized position level of 136 over that time; 3) Personnel: AEDC will request that all three salary sections in its Appropriations Act for FY17 be merged into a single section, allowing the Agency to cost share certain positions whose KSAs allow for utilization across multiple divisions. Elimination of fifteen total positions (13 budgeted, all General Revenue) identified by the Agency’s Executive Team as duplicative or no longer necessary. Type II Transfer of Rural Services and Science and Tech Authority provided positions that overlapped several already part of AEDC’s FY15 allocation. Potential Annual Salary and Match savings of $645,000; 4) (Operations) Fleet Management – The Agency now has thirty-nine vehicles in its current fleet. The Agency’s Executive Team recommends a reduction of four vehicles, providing a potential annual savings of $11,000; 5) Space Consolidation – Currently occupies space on separate floors of 900 West Capitol. With our personnel strategy, the Agency expects to be able to consolidate all staff on a single floor, providing a potential annual savings of $150,000; 6) Mining staff for more efficiency opportunities – AEDC prides itself on its professional and knowledgeable staff. The Executive Team is encouraging that staff to come up with their own ideas for efficiencies that could prove helpful state-wide. Recent examples include: Changing service schedule on vehicles from 3,000 miles to 5,000 miles, more in tune with newer oil lives; 7) Request special language to allow for Promotional Items purchase by AEDC rather than by its 3 rd party marketers exclusively, giving the Agency more control over purchases and pricing.183 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

Definition of efficiency. AEDC equates "efficiency to Fiscal Responsibility, one of our core values."184

AEDC has voluntarily eliminated 15 positions, reducing authorized staff from 136 to 121.185

Performance measures. AEDC provided the following answer: "AEDC does not currently employ any definitive performance measures other than the “bottom line.” This is exemplified by the return of over one-half million dollars in General Revenue in FY15. This is a direct indication of AEDC’s commitment to be good stewards of our citizens’ money under its current leadership."186

Customer base. AEDC reports its customer base "is defined by our enabling legislation and other state laws. In general, all companies and communities make up our customer base."187


Recommendations

AEDC returned unused funds last year, a commendable achievement. Employees should be eligible for performance bonuses as a future incentive.

The commission's mission statement should be amended to include efficiency as a policy goal, and a strategic plan should be developed and include a section on efficiency. Both should be posted online.

Nonfarm Payroll Employment growth should be adopted as a performance measure. Arkansas' employment growth should be measured against regional and national averages, with the goal of equaling or surpassing these measures on an annual and cyclical basis.

184 AEDC response to questionnaire. 185 AEDC communication. "Two additional positions have been identified to the Office of Personnel Management for possible elimination in FY 2018, bringing the final total to 17."186 AEDC response to questionnaire187 Ibid.188 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Insurance Department

Summary

Mission statement posted online? Yes Mission Statement cites efficiency? No189

Strategic plan posted with efficiency reference? No Actual expenditures greater than CPI? Yes Performance measures Yes Customer base defined? Yes Efficiencies in regional states? No Department-identified efficiencies? Yes190

Dollar amount from identified efficiencies? About $200,000

Use of tax dollars. AID is a net contributor to the state's general revenue. In 2015, the department collected more than $250 million in revenue, of which $33 million was derived from licenses and fees, while totaling $12.5 million for operations.191 In addition to the transfer of premium tax receipts to DFA, AID revenues also fund the budgets of the state's constitutional offices, capital expenditures and training for fire departments in the state. The following chart reports funding by source:192

FY 2009 FY 2015

General Revenue --- $1,464,661Special Revenue $12,675,890 ---Federal Revenue $468,101 $10,239,721Cash Funds $184,529 $171,188Other Funds $26,657,063 $45,860,668Total Operating Expenditures $39,985,584 $57,736,238

Part of this increase is attributable to growth in federal grants. The department's Health Insurance Rate Review Division (HIRRD) is "charged with protecting Arkansas health insurance consumers from unreasonable premium rate

189 “The purpose of the State Insurance Department is to serve and protect the public interest by the equitable enforcement of the state’s laws and regulations affecting the insurance industry. The primary mission of the State Insurance Department shall be consumer protection through insurer solvency and market conduct regulation, and fraud prosecution and deterrence.”190 The department identified seven efficiencies in response to a questionnaire:

Moving Public Employee Claims Division from neighboring building back to AID main facility (est. savings of $80K in rent); Conducting internal review of all divisions to identify redundant work functions, attendance and performance issues; Rewriting and upgrading procedure manual for Criminal Investigation Division; creating similar changes in other divisions; Absorbing duties of vacant administrative positions and other positions with existing employees (currently approximately

20 vacant positions within AID where duties have been absorbed by active employees); Creating an online venue for pre-licensing education for insurance agents and producers (will allow more potential agents

to prepare for license exam); Updating premium tax collection/payment system to “Opt-Ins.” This system is offered through NAIC and is more efficient

than outdated software and does not cost AID to operate.191 AID 2015 Annual Report192 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

increases. The Affordable Care Act (ACA) requires states to establish a process for reviewing these increases,"193 according to the questionnaire.

Definition of efficiency. The Insurance Department defines efficiency as:

Using existing resources to achieve goals and to shrink government through attrition;

Eliminating unnecessary redundancies throughout the Department; Cross training to facilitate retention of well-qualified staff; Shadowing and preparation for future retirements in key positions to

minimize on-the-job training.

AID officials state the department has driven efficiencies by operating with 30 fewer FTEs "through attrition and absorption of duties."194

Performance measures. The Insurance department, in its response, noted, "Through our internal review, we have initiated discussions on policy changes that will assist in evaluation of workplace distractions; promotion of wellness and rewards for good work; and addition of accountable and measurable performance goals within each division and tied to Performance Evaluations." The department is proposing "a way to show appreciation to those employees that have diligently and faithfully executed their duties and are reaching milestones in those careers: 10, 15, 20, 25, 30 years of service ..." The department also suggests providing a "symbolic milestone memento for those at the 20 and 30 year mark," and "a one-time bonus for those reaching the 15-, 20-, 25- and 30-year marks." Another idea is a meeting with the governor to acknowledge long-serving employees.

Customer base. The base includes, but it is not limited to "consumers, insurance agents, insurance companies (domestic, foreign and alien), General Assembly, Governor, other state agencies, state employees, advisory organizations (NAIC, NCCI, etc.), and industry trade associations (Independent Insurance Agents, ISO, NAIFA, etc.)."


Recommendations

The Insurance Department should develop a strategic plan that includes a section on efficiency. The plan should be posted online.

193 Under this rate review program, health insurers seeking to increase Arkansas insurance premium rates must now provide consumers with easy to understand information about the reasons for significant rate increases and post justification for those increases on the HIRRD website. The department's response to the questionnaire notes about "$8.5 million in federal grants."194 AID communication195 Reason Foundation, Annual Privatization Report 2014, 2015

Arkansas Military Department/National Guard

Summary



Spending greater than CPI? Yes Performance measures? Yes Customer base identified? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes198


Use of Tax Dollars. Total operational expenditures increased 15.5% versus CPI (9.0%) in the period under review. The following chart shows funding by source:199

FY 2009 FY 2015

General Revenue $8,670,440 $9,897,204Federal Revenue $39,134,517 $50,580,564Cash Funds $954,346 $120,264Other Funds $3,915,817 $234,574Total Operating Expenditures $52,675,120 $60,832,606

Definition of efficiency. ARNG defines efficiency as "A measure of productivity, with the goal being to maximum productivity with minimum wasted effort or expense. (Lean Six Sigma). During continuing times of constrained resources and increased requirements, we define efficiency as “doing more with less."200

Performance measures. ARNG "uses numerous metrics to track the status or progress against established goals and objectives. An objective ideally contains the following characteristics: Specific, Measurable, Achievable, Relevant, and Time-bound."201

Customer base. ARNG defines its customer base as follows: "Our Product is: Trained, ready professional and units. Our Customers are: Nation, State, and Community. A more specific product/customer breakout is:

196 "To provide trained, ready professionals and units responsive to the needs of the nation, state and community."197 Efficiency is discussed in the Arkansas National Guard's annual report.198 The department identified one efficiency in response to a questionnaire. 1) "(ARNG) has developed a Strategic Energy Plan (STEP) to steer the organization toward continual improvement in our efforts to reduce consumption and minimize our environmental footprint. Specific strategies and milestones have been established to measure the progress of the plan." 199 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx200 ARNG response to questionnaire201 ARNG response to questionnaire

Product: Combat Mission Capable UnitsCustomer: Department of Defense

Product: Homeland Defense Mission Capable UnitsCustomer: NORTHCOM (U.S. Northern Command)

Product: Natural Disaster Response (State)Customer: Governor

Product: Local Community Support (Manpower, Facilities, Equipment)Customer: Communities"


Recommendations

The agency's mission statement should be amended to include efficiency as a policy goal, and posted online.

The agency is unique among state agencies in using a Lean Six Sigma process to advance efficiency. Lean Six Sigma is a management process that seeks to eliminate waste. Management of other state agencies would benefit from understanding this process.

Other agencies should review the agency's performance measures to reduce silos.

202 Reason Foundation, Annual Privatization Report 2014, 2015

Department of Arkansas Heritage

Summary

Mission Statement cites efficiency? No Strategic plan posted with efficiency reference? No Spending greater than CPI? No Performance measures Yes Customer base defined? Yes Efficiencies in regional states? No Department-identified efficiencies? Yes203


Use of tax dollars. The Department of Arkansas Heritage (DAH) includes a central office and seven state agencies. The four museums are the Delta Cultural Center, Historic Arkansas Museum, Mosaic Templars Cultural Center, and Old State House. The three resource/grant-making agencies are the Arkansas Arts Council, Arkansas Historic Preservation Program, and Natural Heritage Commission. Total department operational expenditures declined in the period under review as the following chart illustrates:204

FY 2009 FY 2015

General Revenue $5,840,047 $6,852,716Special Revenue $7,202,119 $6,430,526Federal Revenue $2,416,891 $1,619,484Cash Funds $1,353,514 $601,336Other Funds $7,985,507 $2,661,259Total Operating Expenditures $24,798,078 $18,165,321

Definition of efficiency. The Heritage department's central office provided the following definition: "Although technical efficiency is producing the required outcome with the minimal (or appropriate) amount of resources, time, and cost,

203 The department identified 53 efficiencies in response to a questionnaire, the largest of any respondent. Central Office: " During 2015, the Central Office has undergone an assessment of the staff roles in each agency and is in the process of centralizing and consolidating duplicate positions within the agencies. For FYE 2017, DAH relinquished 8 full time positions. DAH is in the process of constructing a new energy and space efficient facility to house the three resource agencies and the central office. The offices will move when the current lease expires in August, 2016. DAH is transitioning to DIS as an IT service provider and is studying various uses of technology to streamline processes such as grants management, HR and other document management, etc." Arkansas Arts Council: "AAC is transitioning its grant review process from in-person meetings to meetings by conference call and online through Go-To-Meeting or other online meeting providers. Arkansas Historic Preservation Program (edited for space): The Section 106 Program is digitizing data to make it available online. Developing a Project Identification Form that could be used to document negative finding results from cultural surveys, which would reduce review time. Digitize previously reviewed project locations to decrease time needed for staff member reviews. Travel to sites is coordinated internally to maximize route and travel times. Project reviews are completed within a week. Amended grant agreements to require more agency oversight of the initiation phase of projects to ensure they are designed and implemented in a way that produces a useful, quality product. Short, local trainings with preservation commissions instead of central sessions to ensure commissioners are trained, and resources are not being spent to train the same core group. Established online resources that are shared with local contacts and commissioners for commonly used administrative forms and instructions and reference and training materials. Using Google Forms and Survey Monkey for reporting, data gathering, and training registration purposes. Other efficiencies are noted at the end of this section.204 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx

heritage agencies are outside the dictates of a normal market economy which makes measuring efficiency difficult. For museums, several indicators of productivity are computed including energy efficiency, per visitor gross sales income at museum store, marketing efficiency and fund raising efficiency. Even total visitation and usage of online collection databases is a measure of consumption; however, other factors such as the quality of the exhibits and the significance of the collection to future generations is not easily measured. In addition, for resource agencies, indicators of productivity include number of educational programs produced or grant recipients served, number of constituents who receive technical service, and number of species/acreage of natural areas protected and maintained."

DAH has voluntarily eliminated 8 positions, reducing authorized staff from 139 full-time employees to 129 full-time employees.205

Performance measures. The department, in its response to a questionnaire, listed more than 30 performance measures, though gaps in utilization exist among resource agencies. The Arkansas Arts Council relies on 21 measures. One example: "Audience reached through direct investment in arts organizations and programs." The Arkansas Historic Preservation Program uses four measures. The Mosaic Templars Cultural Center relies on six measures. These are "data in relation to budget, attendance, social media coverage, volunteers and staffing for all of our public programs to include education museum tours and outreach." The Old State House Museum is "accredited by the American Alliance of Museums" and uses "performance measures ... related to maintaining that status. Other measures were vague or nonexistent. The Historic Arkansas Museum stated, "Most of our performance measures have to do with customer satisfaction and self-evaluation with an eye toward efficiency and the quality of the product." The Natural Heritage Commission does not utilize performance measures that "specifically define efficiency." The Delta Cultural Center "does not utilize what is defined as performance measures." The Arkansas State Archives uses nine performance measures.206

Customer base. All seven Heritage department resource agencies answered they identify their customer base, though only one cited taxpayers in a response.

Arkansas Arts Council. AAC customer base includes providers of arts programming, as well as all citizens of AR who would like the opportunity to participate in the arts as audience members. AAC also focuses on

205 "Through attrition and with some departmental reorganization, DAH was able to eliminate 8 full time positions. These positions were vacated by the employees on a voluntary basis (retirement, etc.)." DAH estimates $362,217 in savings (salaries, FICA, APERS, insurance). DAH communication206 The State Archives were added to DAH on July 1, according to a department communication. Measures are: 1) Cubic feet new acquisitions; 2) Cubic feet of materials processed; 3) # of finding aids added to online search; 4) # of titles and reels filmed; 5) # of patrons served onsite; 6) # of patrons served virtually; 7) # of outreach activities in which staff engages (presentations, meetings, conferences); 8) # of public reached through agency outreach activities; 9) # of items in digital collections and site traffic.

schools and after school programs to provide arts learning opportunities to students.

Arkansas Historic Preservation Program. 1) Section 106 Program - Our customer base is any undertaking in the state that has a federal permit, license, funds or oversight associated with it. 2) National Register and Survey Program - Our customer base is potentially anybody in the state, since anybody in the state could potentially desire to nominate a property to the National Register, or potentially utilize our survey information. 3) Community Outreach - Our customer base is the taxpayers of Arkansas. 4) Main Street Arkansas Program - Our customer base is the taxpayers of Arkansas. 5) Federal Programs - Our customer base consists of property owners with conservation easements attached and citizens across the state that need technical assistance with rehabilitating their historic properties.

Natural Heritage Commission. Our customer base consists of

businesses, consultants, natural resource and other government agencies, conservation organizations, colleges and universities, and the general public.

Delta Cultural Center. "For the museum, we wish to appeal to a broad

customer base. We do this by focusing on mission driven exhibits, programming, and services. As an example: We offer temporary and traveling exhibits in a broad range of topics to appeal to various audiences; then utilize programming to deepen that audience base. Our audience ranges from our regional community, to international guests, to seniors, to students, to family groups, to motor coach groups."

Historic Arkansas Museum. "As a state institution, our customer base is

the people of Arkansas. Also as a tourist attraction, our customer base includes visitors to the state. Within these are subcategories for specific programs. For example, schoolchildren are our customer base when it comes to educational fieldtrip programs."

Mosaic Templars Cultural Center. "Our customer base is very broad in a sense because we a share African American history throughout the state of Arkansas with everyone. However, we recognize that a large portion of our visitors that patronize the museum are African Americans."

Old State House. The Old State House Museum is an agency of

Arkansas state government and "is obligated to serve citizens of the entire state. The internet, traveling exhibits and publications make it possible to serve this constituency and beyond. For exhibits and programs we may identify a very specific target audience such as Civil

War buffs, coin collectors, political enthusiasts and movie and music fans to name a few."


Recommendations


Performance measures should be strengthened in several agencies.

Efficiency initiatives identified by the Heritage department208 are extensive and should be subjected to cost-benefit analysis when feasible.

State Bank Department207 Reason Foundation, Annual Privatization Report 2014, 2015208 Additional efficiencies are listed at the start of this section. Natural Heritage Commission: "Establish short term goals across agency sections to improve work focus every 6 months. Periodic review of agency operating procedures to ensure efficiency. Moved the majority of our field staff to an alternative work schedule so that they can work longer days in the field, thus using the same amount of fuel and travel time to accomplish a day’s work. Permitted remote access to the network for exempt employees so that they can access email and working files while out of the office. Broadened our selection of approved land management contractors to better utilize the strengths and locations of each contractor. Created a formal volunteer program and internship program so that we can use outside labor (at no cost) to enhance our abilities to complete tasks in a timely manner while building constituent support. Increased accessibility to electronic records to improve search time. Maintain initiatives to enhance positive work place morale to increase staff productivity and retention. Establishing an “adopt-a-natural-area” program to accomplish more stewardship at natural areas and to increase our constituency. Coordinating a stronger relationship with Arkansas Master Naturalists to foster more stewardship and research work with highly trained volunteers. Creating new cooperatives with partners to share resources and enhance land management work. Ex. New Cooperative agreements being created with Arkansas Game and Fish Commission, Hot Springs Village, and local fishing clubs, to remove cedar trees from glades and prairies on 14 Natural Areas to be sunk for fish habitat in nearby lakes. Working to align management responsibilities with appropriate agency sections to improve administrative timeliness and efficiency. Requested and received an exemption from DFA-Marketing and Redistribution to administer our ecological timber harvesting bids in-house, thus streamlining the process and reducing duplication of effort.. Testing mobile tablets to allow field staff to record, access, share, and upload data, photographs and GPS locations to our central database locations." Delta Cultural Center: "To improve efficiency, we are investing in enhanced broadband connection. To improve efficiency, we are replacing outdated exhibit track-lighting with LED lighting system." Historic Arkansas Museum. "The museum has been moving toward LED lighting to improve energy efficiency, and will have most of the fixtures in the exhibit galleries installed with LED bulbs by the end of the fiscal year. The consolidating of the Business Operations Specialists in DAH has resulted in reduced expenditures, therefore generating more fiscal efficiencies, while reducing the functional efficiencies present when a full-time position is on site. Currently, volunteers, part-time education staff and non-education staff are covering the duties of the three vacant education positions. Full and part-time curatorial staff, un-paid interns and another maintenance worker are covering the duties of the vacant full-time curatorial maintenance position. Mosaic Templars Cultural Center. "In terms of energy the museum is the process of having an energy audit. The museum has also begun turning off lights in areas where lights aren’t needed during the day. We are looking into reducing our museum outreach so that we can begin to focus more on digital and technological ways to reach our audiences. Museum volunteers are being used more to help with events especially after hours that will allow us to use full-time staff less. Our education department has been encouraged to create new programs with materials that are already here at the museum but not currently in use. Old State House: "Energy efficient lighting installed in galleries, on fountain and on building exterior. Storm windows installed on the historic structure. Insulated glass installed on certain parts of the historic structure. Extra insulation added to attic of the historic structure. Energy efficient variable speed air handlers installed in historic structure. Combined trash pick-up with Trapnall (we haul OSH trash to the Trapnall dumpster). Keep lights turned off when not in use; office lighting is motion activated. HVAC filters are changed quarterly. Corrections/Prison work crew performs vital service (extra inmates just saved us $10,000 on paint job). Master Gardeners provide vital service/maintenance of landscaping. Leased parking spaces at Trapnall Hall. Maintenance contracts keep systems monitored so the run efficiently – includes cmf. Plan to install storm windows at Trapnall. Drive a 16 year-old pick up. Maintain all our lawn equipment including 15 year-old John Deer. Reduced number of printers. Reduced number of employees. We rarely attend conferences. Always tightening up heat/air, trash and elevator contracts. Reduced number of security guards for special events. Volunteers help on a routine basis and during special events."

Summary


Strategic plan posted with efficiency reference? No210

Spending greater than CPI? Similar Performance measures? Yes Customer base defined? Yes Efficiencies in states in region? No Department-identified efficiencies? Yes211


Use of tax dollars. Arkansas State Bank Department (ASBD)212 total operating expenditures increased at a rate (9.8%) similar to CPI (9%) in the period under review. The following chart shows funding by source:213

FY 2009 FY 2015

General Revenue --- ---Special Revenue $7,005,852 $7,693,381Total Operating Expenditures $7,005,852 $7,693,381

Definition of efficiency. The Arkansas State Bank Department (ASBD) defines efficiency as "the successful control and management of resources (financial and human) over expenditures and required actions (overhead and operational objectives)."214 ASBD has voluntarily eliminated five positions, reducing

209 ASBD's mission statement states, “Our mission is to provide a legal and regulatory structure for Arkansas that provides the public with convenient, safe and competitive banking, which allows for economic development within this State.”210 ASBD communication, Sept. 16, 2016: "The ASBD does maintain a strategic plan; however, it is not posted on our website." "The strategic plan is reviewed semi-annually and updated as needed. We will review your recommendation at our upcoming mid-year strategic planning session and make amendments as appropriate to the mission statement and the strategic plan."211 ASBD identified three efficiencies in its response to a questionnaire: 1) "In the past five years, we have voluntarily eliminated five positions reducing our authorized staff from 77 to 72 and we continue to closely monitor staffing needs; 2) In 2015, we implemented agency protocols to provide for more off-site examination procedures to be utilized as available. We continue to enhance these protocols and engage in additional off-site procedures as applicable; and 3) In 2016, we will implement a new uniformed and automated examination tool that will leverage technology in order to create a more efficient examination process for the banking industry." The department explained, "Our approach to regulation and supervision ensures safety and soundness, strong consumer protection and economic development for Arkansas banks. As a special revenue agency, we continually strive to provide efficient and professional guidance through our regulatory process while being cognizant of all expenditures and staffing and striving to limit expenditures to items that benefit the banking industry and the citizens of Arkansas. We have successfully met our goals and objectives of the agency and operated a strong bank regulatory environment without the need to increase assessment fees for the banking industry in more than 15 years due to the operational efficiencies within our agency." 212 ASBD's site notes, “The State Bank Department was created by Act 113 of 1913. The Department is charged with regulating commercial banks with main offices in Arkansas. These banks hold assets of $57.6 billion. The Department also is charged with supervising the bank holding companies of Arkansas state-chartered banks; state-chartered trust companies; regional and county industrial development corporations; industrial loan institutions; and capital development companies. The Department operates to ensure the safety and soundness of, and public confidence in, these institutions and organizations.” “The Department and the State Banking Board have responsibility for the issuance of new charters, authorization of branches, and other applications relating to ownership and structure of banks and bank holding companies."213 http://www.dfa.arkansas.gov/offices/budget/Pages/actualExpenditures.aspx214 ASBD response to questionnaire

authorized staff from 77 to 72, while Arkansas state-chartered bank assets have increased from $40.25 billion (June 2009) to $71.8 billion (June 2016).215

Performance measures. ASBD identified seven performance measures:216

The timely completion and delivery of all examinations in accordance with Arkansas law.

The timely completion of all applications submitted by regulated entities in compliance with ASBD internal guidelines and applicable Arkansas law.

The timely processing (1-3 days) of all monthly financial reports (self-examination) for regulated entities.

The timely processing (1-3 days) for all consumer complaints received against regulated entities.

Successful cross-training of all staff members in each of their respective duty areas which results in increased efficiency.

The completion of quarterly internal audits of examination work papers to ensure consistent and efficient practices and procedures are employed.

The successful completion of our annual reaccreditation program through the national Conference of State Bank Supervisors.

Customer base. The ASBD identifies its customer base as "the regulated entities, Arkansas state chartered banks, as identified in the Arkansas Banking Code of 1997, as well as the consumers who are the economic beneficiaries of a safe and sound state banking system."


Recommendations


215 ASBD communication, June 8, 2016. The figure for 2016 is a "projection based on banks expected to convert from a national to a state charter prior to June 30, 2016." State-chartered bank assets were $56 billion in 2015. Data show "the amount of bank assets under (ASBD) supervision has more than doubled over the past ten years and (the department) has successfully managed this growth with no increase in authorized positions."216 ASBD's response stated, "Our agency’s accreditation was first obtained in 1988 and our consistent high ranking in the program is indicative of maintaining an efficient regulatory agency."217 Reason Foundation, Annual Privatization Report 2014, 2015

Download - One cites the Arkansas Game & Fish Commission. Melissa ...arkansaspolicyfoundation.org/EFFICIENCY PROJECT.docx · Web viewThe author wishes to thank Arkansas Gov. Asa Hutchinson,

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