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Strategies for Success in the New Normal

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Title: Strategies for Success in the New Normal


1
Strategies for Success in the New Normal
  • Dr. Joe Saviak, J.D., Ph.D.
  • Associate Professor Assistant Director
  • Public Administration Program
  • Flagler College

2
Redefining Government in the 21st Century
  • The New Normal
  • The Monopoly Is Dead
  • High Performance Government
  • Use of Analytics
  • High Performance Workforce
  • Redesigning Government Partnerships,
    Contracting P3s, Vouchers
  • Redesigning Public Pensions Employee Health
    Care
  • Strategic Planning
  • Program Evaluation
  • Organizational Culture
  • Communication
  • Leading Change/Innovation in the Public Sector
  • Moving from Government to Governance

3
Redefining Government in the 21st Century
  • Its malpractice when we do not provide managers
    and professionals with the understanding, skill
    set, and the ability to use all the tools they
    should have in their problem-solving tool box for
    the challenges of the 21st century
  • Organizing government around the realities of the
    20th century can no longer be justified
  • Real lessons from the 20th century (the
    professional public service model a vast
    improvement over the incompetence and corruption
    in early 20th century local govt.) - some lessons
    still applicable (retain employ what still
    works)
  • But so much has changed that what worked last
    century simply will not work now!
  • As Starling would say, We cant be the Post
    Office in the age of the Internet.

4
The New Normal
  • Heres the current fiscal health of state and
    local government in America (Martin, Levey,
    Cawley, 2012)
  • GAO estimates that collectively local governments
    face a 225 billion structural budget deficit
  • Pew Center for the States (2011) estimates that
    state and local government pension plans may be
    underfunded by 1.33 trillion.
  • Municipalities nationwide ended 2010 with the
    largest year-over-year reductions in general fund
    revenues and expenditures in the last 26 years
    (National League of Cities)
  • American Society of Civil Engineers (ASCE) rates
    the condition of the majority of Americas
    infrastructure as mediocre or poor. The ASCE
    estimates that it may cost up to 3.6 trillion to
    bring the nations infrastructure up to good
    condition (ASCE, 2013)
  • Since 2008, the number of public sector jobs
    eliminated by just local governments alone has
    been variously estimated at between 236,000 and
    850,000 - many of these jobs will not return when
    the Great Recession is over are gone forever.

5
The New Normal
  • As the economy recovers, life in local government
    will be just like it was in the 1990s - this is
    false
  • Punctuated Equilibrium resulting in a New Normal
    - many changes are here to stay and more change
    will be on the way - no single status quo during
    a career in local government change will be the
    constant change will be our new culture
  • Reduced revenues, smaller public sector
    workforce, tough choices on service levels, and
    adoption of new means of financing/delivering
    public services (Martin, Levey, Cawley, 2012)
  • Solutions cannot be short term tactical in
    nature
  • Solutions must be strategic, structural, long
    term
  • We will need to use all of the tools in the
    toolbox of successful public managers we will
    need to be change leaders.

6
The New Normal (Martin, Levey, Cawley, 2012)
  • Specific Strategies
  • 1. Evaluate current services mandates, needs,
    wants, things we dont need to be doing (should
    we be doing this?)
  • 2. Assess current service levels based upon the
    evidence, what can we decrease? (how much - at
    what service level?)
  • 3. Rethink service delivery crisis offers
    opportunities for reform time is now to
    rethink, reorganize, and reengineer service
    delivery (how should we deliver this? Make or
    buy? Contracting, P3s, Grants, Vouchers,
    Volunteers, Pay for Success)
  • 4. Consider more privatization and less
    privatization on a case by case analysis,
    should we outsource or in-source? Just the mere
    process of considering new service delivery
    choices will usually generate cost savings
    (Goldsmith Model allow public sector to
    compete) In-sourcing City of Palm Coast 2.2 M
    cost savings
  • 5. Explore more shared services - you dont have
    to consolidate govts. to engage in joint service
    delivery

7
The New Normal (Martin, Levey, Cawley, 2012)
  • Specific Strategies
  • 6. Identify new revenue streams - improve tax
    collection consider user charges where
    applicable selling services cost recapture -
    diversify from dependence on ad valorem - dont
    leave money on the table
  • 7. Un-freeze assets conduct a lazy assets
    analysis inventory select strategy to
    enhance, optimize each asset - use P3 concessions
    and leases of roads, bridges, and facilities to
    produce new revenue streams for local governments
    (Chicago Skyway) sell public property not
    serving a public purpose
  • 8. Automate, automate, automate achieve greater
    efficiencies with IT solutions (Cloud computing
    instead of physical storage, Use of advanced
    analytics, E-government - use of on-line self
    service for citizens instead of office locations,
    Waterfall to Agile buy success in manageable
    phases (IBM, 2012), Knowledge Management)

8
The New Normal (Martin, Levey, Cawley, 2012)
  • 9. Reform employee health care and pension plans
    wellness programs, HDHPs HSAs, on-site
    clinics, VBID, eligibility audits, generics,
    smoker surcharge, self insure, telemedicine
    change from DB to DC or hybrid
  • 10. Program Evaluation - We can ill afford to
    not measure what we do each day - culture of
    program of evaluation builds public trust
    confidence (Saviak, 2011)
  • 11. Partnerships for funding, service/program
    delivery, regulation, and to finance, build,
    operate, and maintain infrastructure (Saviak,
    2013)

9
The New Normal (Martin, Levey, Cawley, 2012
Saviak 2013)
  • 12. Use all tools in the toolbox - need to
    access the full set of tools
  • beyond the traditional 20th century tools of
    government of legislate, regulate,
  • direct delivery by govt. (Salamon, 2002)
  • 13. Continuously communicate and effectively
    educate conduct honest adult conversations with
    citizens about services, costs, finances,
    choices make sure they have the facts the
    communications burden is yours also let them
    know about your successes (no one else will!)
    have a communications plan for each major
    administrative/policy decision failure to
    effectively communicate can carry a high price!

10
In the New Normal, The Monopoly Is Dead (Benest,
1996)
  • Government no longer has a monopoly government
    now competes!
  • Citizens should be seen as customers citizens
    now have options in the 21st century, when the
    public does not like your agency or policies or
    level or quality of service or its cost, the
    public an do something about it
  • They can fire your agency they can still get
    the service without using you!
  • Options available to policymakers and taxpayers
    include
  • Annexation
  • Consolidation
  • Incorporation contract cities (Weston, Florida
    Sandy Springs, Georgia)
  • Privatization
  • Contract with another public provider
  • Reorganization
  • Reduced funding
  • Service elimination
  • Or just fire staff start over

11
In the New Normal, The Monopoly Is Dead (Benest,
1996)
  • Each local government must now compete for
    customers prove communicate that its policies
    and services represent the best product at the
    best price
  • Citizens will no longer be content with thats
    the way we have always done it, you dont
    understand, its none of your business, etc.
  • Govt. has to continually explain justify its
    spending, policies, services to win and
    maintain public support dont assume it, prove
    it!
  • Citizens cannot just be told they must also be
    convinced
  • Program evaluation effective communications are
    key evaluate and communicate!
  • Local governments also compete in a marketplace
    as they attempt to retain and attract residents,
    businesses, shoppers, tourists, utility and
    transit users, service customers, and arts
    patrons. Public agencies compete for peoples
    cooperation and political support, whether that
    support involves complying with codes, conserving
    water, or paying higher trash fees.
    Realistically, local government cannot force
    people to do anything unless they are willing to
    comply. Because citizens are bombarded with
    communications from all sources, local
    governments must vie for their attention. Cities
    and counties literally must compete on a daily
    basis for peoples hearts and minds.
  • Dr. Frank Benest, former City Manager of Palo
    Alto, California (1996)

12
Local Government in the 21st Century Declining
Social Capital (Putnam, 1995 2000)
  • We regulate human behavior either through private
    institutions, public institutions both as
    private institutions decline, a greater burden to
    address needs, solve problems regulate conduct
    can be placed on public institutions (informal to
    formal, internal to external regulation, social
    norms to laws, private to public
    institutions/functions)
  • Social capital bonding (within group) and
    building (across groups) the strength of
    relationships degree of connectedness to one
    another and to others
  • Social capital helps communities thrive trust,
    engagement, networks, norms enable communities
    to more effectively organize/mobilize/support/resp
    ond to prevent problems, meet needs, maintain a
    higher quality of life strong predictive
    relationship with quality of governance quality
    of life life is different in communities with
    low levels of social capital

13
Local Government in the 21st Century Declining
Social Capital (Putnam, 1995 2000)
  • Major decline in social capital in America in
    recent decades - over the last 25 years
  • 58 decline in club and civic organization
    participation
  • 33 decline in family dinners
  • 33 decline in church attendance
  • 45 decline in having friends over
  • 35 decline in involvement in community life
    (public meetings)
  • While 55 percent of American adults in 1960
    believed others could be trusted most or all of
    the time, only 30 percent did in 1998, and the
    future looks bleaker because the decline was
    sharpest among our nations youth.
  • Roughly 75 percent of Americans trusted
    government to do the right thing most or all the
    time in 1960, a figure that sounds quaint today
    when less than 25 percent trust the government.
  • What does this mean for managers in local
    government? 1) Design policies which foster
    social capital, 2) avoid policies which harm
    social capital, 3) deal with changing citizen
    expectations, 4) influences decisions on programs
    services, 5) managing in an era of distrust,
    6) how to engage citizens?

14
High Performance Government (Abels Lee, 2010
Benest, 1996 IBM, 2008 2011 2013)
  • Priority Issues
  • Redesigning government at all levels from 20th
    century to effectively operate in and respond to
    21st century realities
  • Citizen engagement visioning articulate
    values, hopes, fears educate! Not passive
    consumers but active partners in problem-solving
    - Vending Machine vs. Barn-raising models -
    Neighborhood Empowerment
  • Moving away from sole dependence on traditional
    hierarchical bureaucratic model for
    organizational structure/service delivery -
    Service boundaries matter less service delivery
    matters more service delivery will be organized
    differently (e.g. not one single dept.
    networks, collaboration, joint service delivery)
    managing horizontally
  • Expect surprises doing risk management right!

15
High Performance Government (Abels Lee, 2010
Benest, 1996 IBM, 2008 2011 2013)
  • Priority Issues
  • Focus on results managing for performance
  • Meeting citizen expectations for on-line, real
    time, high quality service coordinated
    response/integrated service delivery - being
    transparent accountable
  • Culture of Innovation in Government
  • Leadership

16
High Performance Government Use of Analytics
(Bachner, 2013 Partnership for Public Service,
2013)
  • Increasing use of analytics by wide range of
    government agencies at all levels to enhance
    outcomes performance reduce crime, prevent
    epidemics, improve agriculture
  • Analytics converts data into actionable
    information to guide decision-making identifies
    patterns, opportunities, and relationships to
    drive decisions
  • Analytics confirm predictive relationships -
    predict prevent problems before they occur or
    in real time as they are occurring confirm
    causes to select solutions target limited
    resources to prevent or react rapidly to the
    problem
  • Case Studies
  • 1. CDC PulseNet identify food-borne disease
    outbreaks identify clusters collect data from
    state public health labs - 291 ROI
    cost-avoidance accounting monetizing value of
    prevention
  • 2. Predictive Policing Santa Cruz PD -
    Computer algorithm uses criminal incident data to
    map high probability crime squares each week -
    top 15 squares in city - officers are briefed,
    resourced, concentrated officers get updated,
    real time, hot spot maps - raining, easy to
    understand use, not mandated to base everything
    on map but map is another tool 27 decrease in
    burglaries

17
High Performance Government Use of Analytics
(Bachner, 2013 Partnership for Public Service,
2013)
  • Lessons Learned
  • Strong support of agency leadership is key
  • Users need analytics that deliver actionable
    information when, where, and how they need it
    must be able to easily access and comprehend the
    tools and modify them to suit their needs
    user-centered
  • Data-driven decision-making must become fully
    integrated into the organizational culture of an
    agency its how we do business here
  • First understand your current operations
    objectives to ID data needs value of analytics
    - where can I obtain data where can analytics
    help?
  • Collaborate with other agencies capitalize on
    their knowledge tools leverage their data -
    share successes lessons learned
  • Create a team to manage the initiative who have
    agency history, analytical abilities, subject
    matter knowledge
  • Sell success to incentivize agency leaders
    employees to support use analytics prove the
    value of analytics with ROI (CDC 291 ROI)

18
Snapshot of the State Local Government
Workforce (Center for State local Govt.
Excellence 2013)
  • 75 of survey respondents are from local
    government.
  • Key Findings
  • The picture is brightening for the state and
    local government workforce, although 33 still
    report pay freezes and 18 report layoffs. That
    compares with 51 reporting pay freezes in 2012
    and 28 reporting layoffs.
  • 27 report that hiring freezes are in place
    compared with 42 in 2012.
  • 56 modified health benefits for employees of
    those changes, 52 involved shifting health care
    costs to employees.
  • 54 made changes to retirement benefits offered
    to employees. 29 of current employees saw an
    increase in their pension contributions, as did
    34 of new hires.
  • 74 rated staff development the most important
    workforce issue in 2013, followed by employee
    morale (70), and managing workloads (68).

19
Snapshot of the State Local Government
Workforce (Center for State local Govt.
Excellence 2013)
  • Reducing employee health care costs, retaining
    staff needed for core services, public
    perception of government workers were also
    identified as important issues by 60 of more of
    survey respondents.
  • The pace of retirements is high, with 22
    reporting that employees have accelerated their
    retirement date. Public employees are retiring
    from state and local governments in historic
    numbers in order to avoid impending changes to
    public pensions and health care (Martin Saviak,
    2014).
  • When asked if employees were financially prepared
    for retirement, 44 percent said, no, and 18
    percent said, yes.
  • Since the economic downturn in 2008, 61 report
    that their workforce is smaller. 19.5 report it
    being the same size. Only 7.4 report it being
    larger compared to 2008.

20
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro, Kellough,
2007 Starling, 2008)
  • Managing a Multi-Generational Workforce 4
    different generations on the job at the same time
    Traditionalists, Baby Boomers, Gen Ex,
    Millenials
  • Each generation may think, work, communicate
    differently diff. goals values expectations
  • Managerial strategies, tools of communication,
    benefits (work-life balance much more important
    to Millenials compared to Traditionalists)
  • Cross-generational mentoring Baby Boomers Gen
    Teach enhance soft skills (professionalism/social
    skills) of Millenials and Millenials teach
    technology to Traditionalists Baby Boomers

21
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro, Kellough,
2007 Starling, 2008)
  • Managing workforce planning will you be able to
    effectively fill vacancies with the right talent
    1 year, 5 years, 10 years from now? massive
    change due to Baby Boomer retirements historic
    opportunity to remake the organization but a
    historic amount of institutional knowledge is
    being lost with retirements of Baby Boomers -
    need to attract and retain high quality
    replacements need to not lose that
    institutional experience knowledge (knowledge
    management) historic opportunity to reshape the
    workplace change organizations with large
    infusion of new personnel what is workforce
    planning? NAPA identifying human capital needs
    required to meet organizational goals
    developing effective strategies to fulfill those
    needs - need to anticipate future workforce
    needs and pro-actively design implement
    specific solutions for those challenges solve
    the problem before it becomes a problem - cannot
    be reactive in HR in the 21st century - need to
    recruit and fill positions
  • Agencies needed to have 1) strong
    succession planning, 2) career tracking,
  • 3) mentoring 4) professional
    development/training programs or you will have a
  • big problem! The organization needed to be
    learning while the person was still on
  • the job so the knowledge does not leave
    when the employee does 5) knowledge
  • management program

22
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro, Kellough,
2007 Starling, 2008)
  • Manage talent strategically recruit, retain,
    develop, mange a high performance workforce
    to attract, retain, develop high quality, need
    1) flexibility in hiring (incentives, direct
    hire), 2) professional/leadership development
    programs, 3) new types of benefits - child
    care, telework, student loan repayment, etc. -
    high demand real competition for knowledge
    workers are you recruiting the talent you
    actually need now in the future? (hint an ad
    on the website or in the local paper is not
    recruitment) - you compete with private sector
    against other public sector employers too need
    for working conditions, wages, benefits, career
    tracks, organizational culture, management style,
    other incentives, etc. to be competitive to
    attract retain knowledge workers especially
    in a recovering economy, these workers have
    options and they change jobs and careers several
    times during their working lives (for example,
    what will happen with your best IT employees when
    the economy ramps back up?) - Investing in
    employee training professional development to
    ensure needed changing competencies skill
    sets - Public employers will have to sustain
    ongoing major investments in workforce
    planning, training employee development - need
    to continuously upgrade skills technical
    abilities of employees the organization needs
    it, the public expects it, and employees want it
    it will cost but failure to plan invest
    could carry an even higher price tag (its just
    like defer/delay of maintenance with your
    infrastructure, theres a point you pass where
    costs go way up because you did not do it when
    you should have

23
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro, Kellough,
2007 Starling, 2008)
  • Need HR flexibility for managers (some decisional
    freedom from the central HR office) critical
    pay authority (able to offer higher pay for
    needed competencies skills), use of buy-outs
    early retirement plans, streamlined hiring
  • Managing a changing workplace environment work
    is not confined to the traditional workplace or
    workweek telework, compressed work week (4/10)
  • Highly diverse increasingly diverse workforce
    and service population in Florida which will
    affect all aspects of HR different employee
    expectations needs new and different
    generations within the workforce HR policies
    need to match the needs expectations of
    changing demographics within the public sector
    workforce
  • Offering benefits that match, motivate, matter
    - more diverse package of potential benefits
    (e.g. not just traditional ones like health
    insurance flexible working arrangements)

24
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro,
Kellough, 2007 Starling, 2008)
  • Manage for Performance need to link employee
    performance with agency strategic plans (e.g. how
    are employees specifically helping to attain
    agency goals objectives?)
  • Performance measurement systems - cannot do the
    generic traditional single supervisor everyone
    gets satisfactory useless evaluation
  • Performance management systems which measure,
    reward, recognize performance pay for
    performance paybanding (pay based on
    qualifications skills rather than longevity) -
    pay for performance (be careful about how you
    design and implement need to fully fund need
    employee buy in)
  • Public sector HR must clearly contribute to a
    culture of performance where employees are
    selected, trained, evaluated, promoted,
    rewarded for performance as opposed to
    non-performance criteria (length of tenure yes,
    there are legal/political constraints to this) -
    If there are policy or managerial obstacles to HR
    contributing to optimizing organizational
    performance, then it is HRs role to identify
    help remove these barriers to performance
    recommend reforms so performance truly matters
    (recommend organizational policies, HR policies
    procedures, incentive disincentive structures
    for performance)

25
High Performance Workforce(IBM Center for the
Business of Government Nigro, Nigro, Kellough,
2007 Starling, 2008 Spreitzer et al, 2012)
  • Help make sure that your organizational culture
    is a positive productive one - employees
    internalize the organizations mission values
    (make the mission and values of the organization
    their own) - the right organizational culture
    facilitates communication, coordination,
    attainment of goals, reduces risk liabilities,
    ensures consistent performance, enhances
    retention, sustains morale, boosts productivity
    performance, maintains public trust - tools
    include selection/onboarding, policy, training,
    supervision, rewards/discipline, teachable
    moments, leadership
  • Measuring employee satisfaction employee
    satisfaction programs a persistent and high
    rate of employee dissatisfaction is evident today
    in all sectors
  • Make sure your employees thrive! Vitality
    Learning. Keep employees healthy, make work
    meaningful, opportunities to learn, innovate,
    lead, provide decision-making discretion,
    information sharing, minimize incivility, provide
    performance feedback, promote diversity

26
The Public Managers Toolbox (Salamon, 2002)
  • Tools are the means by which policies operate
    produce results pick the right
  • tool for the right job and know how to
    effectively use and evaluate it strengths
  • limitations - avoid selecting the wrong tool or
    using the right tool the wrong way
  • 1. Re-engineering Reorganization
  • 2. Contracting Public-private partnerships
  • 3. Vouchers
  • 4. Grants subsidies
  • 5. Regulation economic/social
  • 6. Distribute benefits
  • 7. Government insurance program
  • 8. Social marketing
  • 9. Needs assessment
  • 10. Technical assistance
  • 11. Impact fees
  • 12. Development agreements
  • 13. Sale, use, exchange of property
  • 14. Information technology
  • 15 Tax Budgetary Policy

27
Partnerships (Saviak Christiansen, 2013)
  • We can effectively partner with other agencies
    (public-public), non-profit orgs, private firms
    (public-private) for
  • Funding () grants, new revenue streams, cost
    savings
  • Service/program delivery
  • Regulation
  • To finance, build, operate and maintain
    infrastructure
  • Two counties who build staff a single fire
    station at the county line to serve a large
    development which extends across the borders of
    both (joint service agreement)
  • Local govt. engaging a private sector partner to
    handle agency technology needs or a non-profit to
    deliver a specific program for citizens
    (contracting)
  • State government partnering with a private firm
    who will design, build, finance, operate
    maintain a major highway to serve a major port
    city and several counties in a region of the
    state (public-private partnership)
  • Many success stories across the world nation
    partnerships can help obtain needed expertise and
    skills, reduce costs, improve service, enhance
    efficiency, enhance citizen satisfaction, secure
    financing for infrastructure deliver new
    infrastructure on time and on budget
  • Not a silver bullet solution to every problem but
    it is a potential problem-solver when wisely
    selected, appropriately designed, effectively
    implemented, and rigorously evaluated

28
Partnerships (Salamon, 2002 Cohen Eimicke,
1998)
  • To make partnerships successful, managers need to
    be skilled in procurement, partner selection,
    rethinking service/infrastructure delivery,
    relationship management, contract design and
    management, risk allocation, and program
    evaluation
  • The proposed partnerships must make sense
    whats the rationale - complementary capabilities
    each partner does what they do best - benefits
    outweigh costs for both partners citizens
    experience improved outcomes - risks rewards
    appropriately allocated both partners must be
    all in
  • Nothing new that is really interesting comes
    without collaboration. (Watson Crick
    discovery of the structure of DNA)

29
Two Types of Partnerships Contracting and P3s
(Martin Saviak, 2014)
  • Contracting for goods services
  • P3s for infrastructure
  • Renewed interest today in a valuable tool of
    public management whose successful use in our
    country pre-dates our birth as a nation
  • Dont let policy choices precede research do
    the business case analysis each time
  • Contracting out should not be seen as a challenge
    to but as an opportunity for public
    administration
  • In recent years, many state and local governments
    have dealt with their budget deficits is by
    deferring maintenance on existing infrastructure
    and delaying the construction of new
    infrastructure - somewhat helpful in the short
    term but results in longer term financial
    problems. Is there another strategy available to
    state and local governments?
  • How do we close this funding gap and meet our
    infrastructure needs for the 21st century?

30
Contracting
  • Contracting
  • its the classic Drucker make or buy question
    (Martin, 2001) this is an evidentiary question
    need to collect analyze the data on all key
    performance measures arrived at an
    evidence-based decision - based on the empirical
    analysis, will it be direct delivery by
    government (govt. funds govt. delivers) or do
    we choose to purchase outcomes (govt. funds
    private sector or non-profit provider delivers)
  • State local governments contract with both
    private sector firms as well as nonprofit
    organizations.
  • Estimates are that state and local governments
    annually expend between 1.1 and 1.5 trillion on
    contracting.
  • Eighty percent (80) of American cities use
    contracting to some extent.
  • Over 90 of city officials support contracting.
  • Contracting can be described as guarantor
    government. Government guarantees that the
    service or activity will be provided to citizens,
    but non-governmental providers do the job.
  • Contracting is based on a buyer/seller
    relationship. A state or local government becomes
    the buyer and tells the private sector what it
    wants to purchase (the process is called
    procurement) and receives bids or proposals from
    interested private sector firms (the sellers).

31
Contracting
  • The Benefits of Contracting
  • Increased Competition and Choice
  • Ability to Innovate, Reengineer, and Restructure
  • Cost Savings
  • Economies of Scale
  • Quality Improvement
  • Timeliness
  • Access to Specialized Skills
  • Ability to Deal with Variable Demand
  • Access to Intellectual Property
  • How can the private sector deliver services and
    activities at less cost than state and local
    governments and still make a profit? Adjusting
    workforce to work demand. Private sector firms
    generally make more use of part-time and seasonal
    employees to smooth out workload peaks and
    valleys (match workforce to actual service demand
    ramp up ramp down) which government may be
    less able to do.

32
Contracting
  • The Colorado State Auditors Office (CSAO) has
    developed criteria for use in evaluating services
    and activities for contracting. The CSAO approach
    has been used by numerous other state and local
    governments for a number of years. The CSAO
    approach consists of nine criteria
  • (1) market strength, (2) political
    resistance, (3) service quality,
  • (4) impact on public employees, (5)
    legal barriers, (6) risk, (7) resources,
  • (8) control, and (9) cost.
  • Managing the Contracting Process
  • State and local government usually contract using
    one of three major procurement methods
  • The invitation for bids (IFB) process
  • The request for proposals (RFP) process
  • The request for qualifications process (RFQ)
  • The trick in contract management is ensuring that
    the contract is implemented according to the
    agreed upon terms and conditions without
    impinging on the contractors independent
    decision-making

33
Contracting
  • Successful Contracting
  • What will be our major benefit or benefits and
    what will be our major challenge or challenges?
  • Single Point of Contact
  • Contract Design If something is not in the
    contract, the contractor cannot be held
    accountable for it.
  • Scope of Work
  • Ability to Modify the Contract - every contract
    is considered an incomplete contract.
  • Ability to Deal with Disputes
  • Use of Performance-Based Contracts - PBC involves
    tying payments and contract extensions to the
    contractors accomplishment of output, quality,
    and outcome performance specifications.
  • Contractor Monitoring early warning system
  • Requires a different skill set for public
    managers
  • Avoid bureaucratization of private and
    non-profit providers
  • Select the right method of compensation avoid
    perverse incentives (Goldsmith Eggers, 2004)

34
Public-Private Partnerships (Martin Saviak,
2014)
  • Public Private Partnerships
  • The American Society of Civil Engineers (ASCE)
    rates the condition of the majority of Americas
    infrastructure as mediocre or poor.
  • The ASCE estimates that it will cost 3.6
    trillion to bring the nations infrastructure up
    to good condition by 2020.
  • National, state, and local governments have
    successfully employed public-private partnerships
    to deliver infrastructure and public facilities.
    P3s are not based solely on a buyer/seller
    relationship. P3s involve an alliance between
    government and the private sector with each
    partner sharing in both the risks and the
    rewards.
  • Most Common Public-Private Partnerships (P3s)
  • Airports, Bridges, Highways, Hospitals, Parking
    Facilities, Prisons, Rail Systems, Roads,
    Tunnels, Water/Wastewater. As of 2011, 377
    public-private partnerships (P3s) have been
    initiated in 24 states - 104 of these P3s for
    transportation infrastructure - Florida (16),
    California (12) and Texas (9) have initiated the
    greatest number of P3s.
  • P3s run the gamut from the relatively
    straightforward operations and maintenance (OM)
    to design-build (DB) partnerships to the more
    complex design-build-operate (DBO),
    design-build-operate-transfer (DBOT),
    build-own-transfer-operate (BOTO),
    build-lease-transfer-maintain (BLTM),
    lease-renovate-transfer-maintain (LRTM) to the
    most complex design-build-finance-operate-maintain
    (DBFOM). DB most common. Can structure P3s
    differently depending on the project
    goals/needs/strengths of partners.

35
Public-Private Partnerships
  • Benefits
  • Accelerating infrastructure maintenance and
    construction
  • Substantial risk transfer from government to the
    private sector
  • On-time and within budget delivery of
    infrastructure projects
  • Source of infrastructure funding
  • Cost savings
  • Equal or better quality
  • Because more risk is transferred to the private
    sector partner, P3s tend to be completed on-time
    and within-budget with successful operational
    startup (e.g. the private sector partner who has
    paid for the toll road has a lot of incentive to
    get it built on time and get it producing revenue
    ensure quality and safety so that customers use
    it so they can be repaid make a profit)
  • Case Studies Long Beach Courthouse, Port of
    Miami Tunnel, Chicago Skyway, I-495 Capital
    Beltway, Texas State Highway 130, ADOT Highway
    Reststops
  • Florida has 2 P3 statutes both are well
    designed
  • F.S. 334.30 authorizes FDOT to engage in P3s
    for transportation infrastructure
  • HB 85 F.S. 287.05712 Floridas other P3 statute
    is for local governments

36
Public-Private Partnerships
  • Strategies for Success
  • Is there state enabling legislation? What does
    it allow?
  • Build our institutional capacity knowledgeable
    staff
  • In contracting, we manage the contract in P3s,
    we manage the relationship
  • Its not the traditional buyer/seller
    relationship as with contracting for most
    goods/services especially if it is a DBFOM
    different roles responsibilities for each
    partner - need to adapt traditional public
    procurement to the partnership model for P3s
    private sector partner providing the in DBFOM
  • Different procurement process tools - use of
    RFQ followed by RFP/Competitive dialogue/ITN
    instead of traditional procurement processes
    (ITB/RFP)
  • Designing/implementing long term contracts (e.g.
    30-50-99 years) treat as incomplete contracts
    - enhanced flexibility, periodic review by
    partners, user-friendly contract amendment
    process, dispute resolution mechanism, emphasis
    on PBC tools to make the contract perform over
    the long haul

37
Public-Private Partnerships
  • Strategies for Success
  • Use of unsolicited proposals have a policy for
    this!
  • Project size must be sufficient to attract
    private sector partners (e.g. US 100M) use of
    bundling
  • No progress payments dont change the incentive
    structure of the P3!
  • Whats our P3 procurement policy and procedures?
    Make sure your procurement policies process
    conform to Florida law (HB 85, CCNA) adhere to
    the comprehensive agreement criteria (HB 85)
  • Badly need a model policy developed to distribute
    to local governments in Florida a template that
    local govts. can start with tailor to their
    specific needs
  • Employ best practices lessons learned from
    abroad for your policies and contracts - need to
    utilize international best practices

38
Public-Private Partnerships
  • Strategies for Success
  • Authority to use the full range of project
    financing mechanisms (Iseki et al, 2009)/the
    ability to accept all forms of potential project
    financing for example, all federal assistance
    or loan programs (Nossaman, 2009 Iseki et
    al,2009)
  • Broad authority to consider and engage in a
    diverse range of types of P3 projects (Iseki et
    al, 2009)
  • Creation of a P3 Unit specific organizational
    units should be created to oversee P3s.
  • Contract Provisions - a P3 contract should also
    (1) focus on outputs and outcomes rather than
    inputs methods used (PBC) (2) identify the
    number of asset upgrades, if any, and when they
    are to occur (3) identify if, when and how much
    tolls or user fees may be increased and (4)
    specify what happens to the asset at the end of
    the P3 project.
  • Documentation of Decisions and Directions staff
    will change
  • In P3s, the partner (government or private
    sector) best positioned to deal with the risk,
    should assume the risk.

39
Port of Miami Tunnel P3
  • The Port of Miami actually sits on an island.
    Traffic entering and exiting the Port of Miami
    must do so on surface streets. 26,000 cars each
    day on those surface streets entering leaving
    the port congestion.
  • The Florida Department of Transportation (FDOT)
    has entered into a transportation P3 with a
    private sector consortium partner, MAT
    Concessionarie LLC, to design-build-finance-operat
    e-maintain (DBFOM) a tunnel that will connect the
    port with interstates I-395 and I-95.
  • The total cost of design and construction of the
    tunnel is 903 million. The private sector
    partner contributed 80 million to the project
    with the remainder of the funding in the form of
    debt and loans. Once the tunnel is open to
    traffic, all operating and maintenance costs will
    be paid by the State of Florida. The FDOT will
    collect container and passenger fees to provide
    the revenue stream to fund the partnership.
  • Construction of the tunnel began in May 2010 and
    completion is expected by May of 2014.
    Operational control of the tunnel will revert to
    the FDOT at the end of the P3 contract in October
    2044.

40
Vouchers (Salamon, 2002 Cohen Eimicke, 1998)
  • Vouchers Instead of direct delivery, citizens
    are given a choice by funded access to
  • multiple competing providers Examples GI Bill
    another partnership tool
  • 3 key issues for public managers to assess in
    considering use of vouchers to provide
  • public program or service
  • Choice When the govt wants the receiver of the
    good or service to have some choice of the
    supplier of the good or service
  • Efficiency When the govt wants to promote
    efficiency. A voucher can allow for competition
    and thus lower prices
  • Equitable Vouchers can promote equity and are
    often driven by concerns with fairness (ex
    children stuck in failing or low performing
    public schools low income families provided
    vouchers)
  • Challenges
  • Need competition capacity among providers


  • Ensuring informed consumers - information
    asymmetries (when consumer lacks sufficient
    information to make choices providers knows
    everything consumer knows little)
  • Evaluate provider performance
  • Potential for adverse selection (customers will
    select bad providers or providers will end up
    with bad customers screen providers via
    procurement match providers to diff. customer
    groups)
  • Current policy discussion should we depend on a
    public sector monopoly (the VA) or give our
    veterans the power and choice to pick their
    doctors and health care providers?

41
Redesigning Public Pensions Employee Health
Care
  • The traditional implied contract less pay, more
    benefits is changing
  • Collective bargaining agreements - some services
    in some localities are pricing themselves out of
    the market (Benest, 1996)
  • I can afford 1 fire department I just cannot
    fund 2-3 fire departments at the same time
    (Moore, 2011) cost of retired employee
    pension/benefits obligations
  • GAO unfunded state and local govt. retiree
    health care obligations total 530 billion
    (Martin et al, 2012)
  • SLGE study 68 of city county govts. pushing
    to have retirees assume more of their health care
    costs
  • 85 of state local govt. employees still in DB
    retirement programs
  • State local govt. pension plans underfunded by
    1.3-3 trillion (Pew Center, 2011)
  • In 2008, state local govts. spent about 132
    billion annually on employee health benefits
  • From 1996-2008, the average single employee
    premium increased 156 - for family coverage,
    169 (Barro, 2011)

42
Redesigning Health Care (Barro, 2011)
  • What makes public plans so costly?
  • In the 4th quarter of 2010, public workers earned
    an average of 4.66 per hour in health benefits
    compared to an average of 2.08 per hour in the
    private sector a difference of 124 The plans
    are different in the public sector!
  • Lower employee contributions to premiums 10
    less compared to private sector
  • Fewer and smaller co-payments and deductibles
    insurance plans pay a greater of the bills and
    lower cost sharing increases utilization which
    increases costs - 75 of private sector employees
    have a deductible just under 50 of public
    employees have one
  • 74 of private plans impose a waiting period for
    eligibility only 58 of public plans do and
    when they are required, they are shorter this
    means people take jobs with health benefits
    anticipating a likely claim (adverse selection)
    which means more costs to the plan
  • Only 20 of private plans offer health benefits
    to retirees under age 65 (pre-Medicare) but 66
    of state local plans do
  • 99 of full time state local employees have
    access to benefits (86 in private sector) and
    only 16 of public employees waive them (compared
    to 26 in the private sector)
  • Superior physician networks higher provider
    reimbursement rates

43
Redesigning Public Pensions Employee Health
Care (Brookings, 2014 ALEC, 2013 ICMA, 2013
GFOA, 2011 Barro, 2011)
  • Employee Health Care
  • Identify your cost drivers
  • Manage choice of providers
  • Manage eligibility eligibility audit change
    time to eligibility
  • Cost sharing increase contributions, co-pays,
    deductibles variable premium contributions
  • Offer diversity of plans to employees 1) High
    deductible plan HSAs 2) High deductible, low
    premium catastrophic insurance policy
  • Self insure
  • Implement wellness, health literacy, disease
    management, physical fitness programs smoking
    cessation programs reduce utilization
    decrease costs
  • Surcharges for smoking 9 states reward
    non-smokers make smokers pay more 39 states
    with smoking cessation programs

44
Redesigning Public Pensions Employee Health
Care (Brookings, 2014 ALEC, 2013 ICMA, 2013
GFOA, 2011 Barro, 2011)
  • Leverage Points of Cost Management
  • Change benefits
  • Manage plan participant choice of providers
  • Cost sharing with employees
  • Reduce utilization
  • Right combination of outsourcing insourcing
  • Maximize value
  • ROI All Stars
  • Onsite clinics
  • Variable premium contributions
  • HDHP HSAs
  • Wellness programs
  • Self-insurance
  • Cooperative purchasing
  • Value-based insurance design disease-management
    (VBID) Asheville Model

45
Redesigning Public Pensions Employee Health Care
  • Case Studies The Bailey Group
  • In January of 2013, The Bailey Group transitioned
    Alachua County School District (client since
    2012) from a fully-insured to a self-funded
    platform. Our conservative estimate shows
    5,000,000 in savings for the first year alone
    with no plan changes or cost-shifting to the
    employees. This transition was completely
    seamless to the employee population.
  • In 2006, we took an innovative approach by
    researching on-site health clinics as an
    alternative to reducing medical and prescription
    benefits and increasing premium contributions. In
    2007, the on-site health clinic model was
    presented to St. Johns County School District
    (SJCSD). After months of analysis and meetings,
    including but not limited to, insurance committee
    meetings, board workshops and the final board
    meeting, SJCSD opened their first on-site health
    center in May of 2009. The estimated savings for
    the PPO plan claims was 1.4 million the first
    year, derived from the reduction of primary care
    and specialist office visit charges and
    prescriptions. Due to the success of the first
    clinic, two more on-site health clinics were
    opened in November of 2010. The SJCSD Health
    Clinics provide primary, chronic acute and
    preventative care services along with
    occupational and workers compensation services,
    pharmacy, EAP, lab services and digital x-ray.  
    The Bailey Group has been involved in every
    aspect of planning, implementing and running the
    health centers.

46
Redesigning Public Pensions Employee Health Care
  • Case Studies The Bailey Group
  • Focusing on innovative solutions, The Bailey
    Group introduced a High Deductible Health Plan
    paired with a Supplemental Bridge product to the
    benefits portfolio of a non-profit organization
    in Northeast Florida with approx. 900 employees.
    The employer absorbed the cost of the bridge
    product for their employees to assist the
    employees with the increased deductible. When
    introduced, the High Deductible plan instantly
    achieved 80 participation and will save the
    group over 200,000 in the first year. The
    employees were thankful to have such a
    comprehensive plan, and the employer was
    appreciative of the savings.
  • When conducting a recent dependent audit, we
    estimated over 300,000 in annual savings for one
    school district (calculated using average claims
    per employee per month X the number of dependents
    found ineligible). Additionally, just last year
    one of our Account Executives successfully fought
    to have a 180,000 claim rescinded for a large
    self-funded client based on incorrect diagnosis
    coding. It took 8 months, but the carrier finally
    agreed and neither the employer nor the
    participant was responsible for the claim.

47
Redesigning Health Care(GFOA Colonial Life,
2011)
  • To succeed with these strategies, local
    governments should
  • Secure stakeholder support
  • Use employee benefit committee they participate
    in plan decisions increases buy in
  • Provide employees with benefits value statement
    with costs educate them about the real costs
    of HC
  • Sell the benefits of specific types of reforms to
    employees (on-site clinic convenience, HSAs help
    them accrue savings, self insuring can better
    match employee needs)
  • Emphasize ROI to decision-makers
  • Compensation study to show public compensation in
    line with other local governments
  • Implement long term reform incrementally!

48
Keeping the Promise State Solutions for
Government Pension Reform (Liljenquist, 2013)
  • The sad fact is that political calculations give
    legislators strong incentives to promise generous
    benefits and few, if any, incentives to make good
    on those promises. (p. iii)
  • Local govt. can go bankrupt restructure
    states cannot
  • States can have increasing pension burdens rob
    them of discretionary spending decisions
  • 76 of 126 (60) major state and local plans below
    the recommended 80 funding ratio
  • Unfunded liabilities ranging from 730 billion to
    4.4 trillion

49
Redesigning Public Pensions (Brookings, 2014
ALEC, 2013 ICMA, 2013 GFOA, 2011 Barro, 2011)
  • Specific Potential Pension Reform Solutions
  • Leaders must commit to permanently fixing the
    problems
  • You must confirm the actual scope of the problem
  • Dont exempt public safety employees retire
    earlier so price tags are larger, exempting them
    may make your reforms legally vulnerable,
    citizens support public safety but they also want
    fiscally sustainable pension plans
  • Know the legal limits (case-law)
  • Effectively communicate sell reform
  • Tools of Reform
  • Delaying retirement (increase age service
    requirements)
  • Stop double dipping eliminate pension spiking
    (cashing in a large amount of sick leave or OT in
    the final year of employment)
  • Limit COLAs/make COLAs contingent upon the
    financial health of the plan
  • Change from non-contributory to contributory
    plans
  • Increase contribution requirements
  • Change the calculation of final average salary
  • DB to DC for new hires, hybrid plans, CB plans
  • Decrease the multiplier
  • Place a hard cap on pension payouts

50
Redesigning Public Pensions (Brookings, 2014
ALEC, 2013 ICMA, 2013 GFOA, 2011 Barro, 2011)
  • How to Sell Pension Reform
  • Assess the Environment for Major Reform
  • Develop a Winning Message
  • Talk with System Stakeholders
  • Message Math not Ideology
  • Reforms need Strong Champions
  • Accurate Data Effectively Communicating Pension
    Liabilities are Key
  • Prove the Impact of Pensions on Taxes other
    Public Spending Priorities
  • Anticipate and plan for Legal Challenges
  • Ensure People Understand that We Cannot Grow Our
    Way of the Problem
  • Ensure People Comprehend that Inaction is not an
    Option
  • Sell Benefits to Public Employees More take
    home pay, sound retirement
  • Build a Strong Support Coalition
  • Identify What Can Be Negotiated and What Cannot
    meet commitments to current retirees take steps
    for a troubled plan (close the plan to new hires,
    freeze the amount accrued by current participants
    (do not add to your problems), move to a more
    sustainable model
  • Understand that Plan Administrators are in a
    Predicament as far as Public Statements Go they
    dont want to alarm employees or bring their own
    management into question you need them to make
    accurate statements use outside expertise too

51
Strategic Planning (Cohen Eimicke, 1998)
  • This process seeks to arrive at the best fit
    between the organization its environment so
    that organizational goals are attained
  • It is about our mission, our customers, our
    future how we will best survive, succeed,
    serve for years to come - planning involves
    identifying threats opportunities in the future
    designing plans which optimize those
    opportunities and reduce/thwart those threats in
    the present
  • Enables us to be pro-active identifying
    opportunities to optimize our success - driving
    events instead of always being driven by them
    leading change playing offense - no longer
    reacting to the issue of the moment only
    playing defense
  • SP facilitates success in leading and managing
    change - times change successful organizations
    change with them - organizations which fail to
    anticipate, lead, manage change will at best
    compromise their performance or at worst, begin
    to write their own organizational obituary - It
    is futile, for instance, to try to ignore the
    changes and pretend that tomorrow will be like
    yesterday, only more so.(Drucker, 1999)
  • Given our mission, strengths, weaknesses,
    opportunities, threats, stakeholders, history,
    capacity, and resources, what should our
    objectives be and which strategies can we design
    and implement to achieve them?
  • R ? M ? G ? O ? S ? T ? I ? E

52
Strategic Planning (Cohen Eimicke, 1998)
  • The temptation in many organizations is to go to
    a retreat, or go through a strategic planning
    exercise, develop the strategy, and then ignore
    it.
  • Strategic Planning
  • Need leadership organizational commitment to
    the process
  • Resource constraints are important
  • Strategic goals must reflect organizational
    capability or they will not happen
  • SP connects ends to means
  • SP helps the organization collectively think
  • There are risks 1) Goal definition will have
    explicit trade-offs heres what we will do and
    what we dont do may spur political opposition
    from internal and external groups who dont share
    those objectives 2) SP can fail wrong mission,
    goals, or objectives selected, lack of
    leadership, lack of capacity, no real commitment,
    lack of accountability, objectives not measurable
    or measured, action plans not well designed or
    effectively implemented, organizational barriers
    (agency culture, personnel, policies, procedures
    not geared towards performance),
    politics/external constraints

53
Strategic Planning - Benefits to Planning in
Public Management (Cohen Eimicke, 1998)
  • Clarify our mission, goals and objectives
  • Optimize organizational performance
  • Efficient allocation of limited resources
  • Boost morale employees internalize the mission
  • Attract resources its easier to get agency
    stakeholders citizens to invest in a winning
    plan they can see, understand, support
  • Enhances public confidence with a clear plan
    and demonstrated outcomes, the public can
    understand and support what our agency is doing
  • Anticipatory government being prepared for the
    predictable and theres a lot that is capable of
    being predictable - limit the of surprises,
    their duration, intensity
  • Enables us to successfully introduce lead
    change

54
Proving Performance Program Evaluation
  • Program evaluation must be a priority why?
  • 1. Limited/shrinking resources - in Florida, a
    multi-year recession and Amendment 1 have
    significantly reduced revenues and triggered
    scrutiny of spending review of programs by
    local govt. - restraints on resources force
    choices to be made (Rossi et al, 2003).
  • 2. Demand for greater accountability by
    policymakers public Continued consistent
    pressure to constrict or terminate programs that
    fail to demonstrate effectiveness and/or
    efficiency (Rossi et al, 2003).
  • 3. Need to restore public trust confidence -
    Program evaluation can demonstrate to the public
    that you are operating both effectively and
    efficiently - program evaluation enables you to
    make the case to citizens that you are doing the
    job right and you are the one to do it for them.
  • 4. Its required for - Program evaluation
    often is automatically required as a condition of
    receipt of a federal or state grant 1/3 of
    local government budgets consist of fed. state
    grants if you like grants, then you need to
    learn to love program evaluation.

55
Proving Performance
  • What is program evaluation/policy analysis and
    what can it help us do? (Royse, Thyer, Padgett,
    Logan, 2006)
  • Apply the tools of the scientific method to the
    problems, causes consequences of public policy
    - predict which programs would likely work
    explain why a policy failed
  • Help us document need, better allocate resources,
    aid in program planning design, aid in program
    reform or modification, assist policymakers and
    administrators (executive decision support),
    identify best practices replicate them
    actually help citizens
  • It can also aid us in building public confidence
    that we actually know what we are doing why we
    are doing it.
  • Can enable us to separate the signal from noise
    and determine the real causes of a problem
    which policies actually address those true causes
    to produce better outcomes

56
Proving Performance
  • Tools to measure validate program
    effectiveness
  • experimental design
  • quasi-experimental design
  • single system research design
  • meta analysis
  • Tools to measure validate program efficiency
  • data envelopment analysis (DEA)
  • cost benefit analysis (CBA)
  • cost effectiveness analysis (CEA)
  • Tools to measure validate program equity
  • equity evaluation
  • use of major ethical frameworks
  • All of these are done can be done by local
    agencies
  • Not always a need to do the study, someone else
    has probably done it for you
  • (Royse, Thyer, Padgett, Logan, 2006)

57
Proving Performance
  • What gets measured gets done.
  • If you dont measure results, you cant tell
    success from failure.
  • If you cant see success, you cant reward it.
  • If you cant reward success, youre probably
    rewarding failure.
  • If you cant see success, you cant learn from
    it.
  • If you cant recognize failure, you cant correct
    it.
  • If you can demonstrate results, you can win
    public support.
  • - Osborne and Gaebler, Reinventing
    Government, 1993
  • Program Evaluation Effective Communication
    Public Support

58
Proving Performance
  • What can PE tell us? (Royse, Thyer, Padgett,
    Logan, 2006)
  • ? Program Need the extent to which a program
    meets a community need and the extent to which a
    program is reaching its target population
  • ? Program DesiGN are the hypothesized
    relationships between the causes of the problem
    effects of the program correct?
  • ? Program Implementation is the program being
    implemented/service being delivered as intended?
  • ? Program Effectiveness program outcomes are
    achieved
  • ? Program Efficiency best use of limited
    resources
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