Performance Measurement and Budgeting in Indiana

Adam M. HorstGovernment Efficiency and Financial Planning

Office of Management and Budget

June 20, 2005

• Observations of the Government Efficiency Commission (2004)– Data for effective management not available– Limited effective use of technology– Bewildering array of agencies, departments

and commissions– Cost reduction cannot occur without radical

change to number and composition of programs, services and culture

Where did we start?

• Governing Magazine, Grading the States 2005 • Indiana graded C+• Main Observation: “Comprehensive performance information is not

routinely provided to the governor, the budget office or the legislature. Though some agencies are producing it, Indiana is not collecting performance information on a statewide basis and though agencies generally provide performance measures when they testify before the legislature, such data is not strongly used by the state.”

Where did we start?

“Aiming Higher” – First 100 Days • Governor Daniels issued Executive Orders and

proposed Legislation that did the following:

– Created IEDC (Department of Commerce) – Created Chief Information Officer (CIO) / Office of

Technology – Created Office of Inspector General – Created Office of Federal Grants – Created Office of Faith-Based and Community Initiatives– Separated Department of Child Services from Family and

Social Services Administration

(Continued)

“Aiming Higher” – First 100 Days

– Initiated inventory of state assets and sale of surplus and underutilized property (vehicles, aircraft, and real property)

– Facing a structural deficit of nearly $700 million, Governor Daniels proposed the first honestly balanced budget in more than a decade (Legislature passed a biennial budget that is balanced in FY07, but not in FY06)

– Created Office of Management and Budget, including a new Department of Government Efficiency and Financial Planning

Government Efficiency and Financial Planning

• Responsibilities include:- Establishment of performance metrics for state

agencies- Organize and staff the agency review mandated by the

budget bill (HEA 1001-2005)- Make recommendations for consolidations and other

cost savings ideas- Identify competitive sourcing opportunities- Coordinate with Indiana Department of Administration

to organize and staff a Strategic Sourcing Initiative

Performance Measurement

• Some agencies have collected data, particularly those receiving federal dollars (Department of Transportation, Department of Workforce Development, etc.)

• Otherwise, data not collected, monitored or analyzed

• 35 Agencies have begun performance measurement process (many more to be included when agency reviews are initiated)

• 2nd Quarter Report to be released on July 20th

Governor Mitch Daniels

• Director of the Office of Management and Budget (2001-2003)

• Helped create PART (Program Assessment Rating Tool) for the federal government

• “If you’re not keeping score, you’re just practicing.”

• In line with his “Aiming Higher” agenda, Governor Daniels demanded performance measures with ambitious targets for all state agencies, even if it could take years to reach the green targets.

Department of Correction Commissioner David DonahueGEFP Liaison Adam M. Horst

Agency Mission:

Statewide Initiatives: 13-Jan-05 28-Feb-05Annual Savings & Efficiencies ($000) $14,691 Headcount 9,493 9132One-Time Savings & Efficiencies ($000) Assets ($000) $497,422Competitive Sourcing Participation Yes

Agency Metrics: Result

Rehabilitation MetricsPercentage of eligible offenders enrolled in time cut programs (education, substance abuse, vocational) 30% 60% 40%

Percentage of eligible offenders participating in work release 90% 70%

Percentage of released offenders who return to IDOC within 3 years of release 18% 25%

Efficiency MetricsAverage per diem

Adult Facilities $58.99 $51.50 $54.00

Juvenile Facilities $173.26 $138.25 $156.00

Inmate Labor

Number of hours worked by offenders at parks, road crews, etc - per week c. 12,425 14,250 12,425

Amount of money saved by use of inmate labor - per week $48,457.50 $55,575.00 $48,457.50

Safety MetricsNumber of escapes/walkaways 0 e/8 w 0 e/ 5 w 0 e/ 12 w

Average length of time before apprehension 1 day 5 days

Number of incidents occurring while offenders work at places outside of facilities (parks, road crews, etc) - per 1,000 hours worked (injuries) 3 5

The mission of the Indiana Department of Correction is to maintain public safety and provide offenders with self-improvement programs, job skills, and family values in an efficient and cost effective manner for a successful return to the community as law abiding citizens.

Target Comments

targets under development

working on benchmark - June 1 deadline

currently figuring benchmark

currently figuring benchmark

HEA 1001-2005 (Budget Bill)

The general assembly requests that the governor direct the office of management and budget to thoroughly review the:

(1) budget of each executive department agency and instrumentality; and(2) overall functions of the executive department of state government;

for the purpose of finding efficiencies that might yield significant cost savings. The general assembly requests that both the size and the scope of these agencies and functions be thoroughly reviewed.

Performance-informed Budgeting

• Budget bill requirements relating to performance budgeting– OMB to review the budget and overall

functions of each executive department– Review to include size and scope of agencies

and functions with the purpose of finding efficiencies

• Link program needs and performance to budget requirements

What will OMB be looking for?• Identification of primary programs and functions

that should tie in with each agency’s mission statement, strategic plan, and performance measures

• Identification of programs that cut across two or more agencies (possible solutions: realign to eliminate duplication, encourage cross-agency cooperation)

• Identification of statutory obstacles that inhibit exceptional program effectiveness

(Continued)

What will OMB be looking for?

• Identification of non-core functions, which are often prime candidates for consolidation or competitive sourcing

• Special focus on programs and initiatives recently launched by Governor Daniels (e.g., RX for Indiana, Indiana’s Fight Against Meth, etc.)

• Demonstration by agencies of recent efforts to become more efficient as well as a willingness to consider new ideas

What should agencies do?• Prioritize primary programs and functions,

paying special attention to those that overlap with the Governor’s and/or Legislature’s agenda

• Consider eliminating non-core functions (or at least allowing other agencies or private firms to provide these services)

• Create performance metrics that tie back to their mission statement and primary programs

(Continued)

What should agencies do?

• Seek out opportunities for inter-agency cooperation

• Aggressively pursue funding from federal sources

• Track and monitor cost savings initiatives• Lead agencies in statewide initiatives

aimed at increasing efficiency and generating savings (e.g., strategic sourcing, asset disposition, etc.)

Example: Highlights of Governor’s Plan to Fight Methamphetamine

• Utilize a partnership with Indiana’s colleges and universities to help reduce the backlog of drug cases at state police drug-testing laboratories while preparing Indiana students in the forensic science field

• Develop a “real time” reporting database between prosecutors and drug-testing labs

• Standardize procedures for removing and protecting children exposed to meth production

Continued: Highlights of Governor’s Plan to Fight Meth

In addition, Governor Daniels took the following actions:

• Supported and signed a methamphetamine bill that restricts access to ephedrine & pseudoephedrine, two products used in the production of meth (SEA 444 – Meth Prevention Act)

• Launched a pilot program at the Miami Correctional Facility that is providing specialized treatment to help rehabilitate meth users and lower repeat offender rates (CLIFF – Clean Lifestyle is Freedom Forever). The program was recently expanded to the Wabash Valley Correctional Facility.

Lessons: Governor’s Plan to Fight Meth

1) Multiple agencies have roles to play in the fight against meth, and the sharing of criminal justice information will be vital to the success of the Governor’s initiatives

2) Each agency can identify quantifiable measures that will help demonstrate the success or failure of their programs. For example:

• State Police – number of meth labs seized and dismantled; backlog of drug cases at State Police laboratories

• Criminal Justice Institute – number of meth education programs held; amount of federal grant dollars directed towards Governor’s meth initiatives

• Department of Correction – recidivism rate of offenders who have participated in meth rehabilitation programs

Questions? Comments?

Adam M. Horst

Government Efficiency and Financial Planning

Indiana Office of Management and Budget

ahorst@omb.in.gov