1. Performance Measurement and Budgeting in Indiana Adam M. Horst Government Efficiency and Financial Planning Office of Management and Budget June 20, 2005

2. 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?

3. 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?

4. “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)

5. “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

6. 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

7. 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) 2 nd Quarter Report to be released on July 20 th

8. 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.

10. 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.

11. 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

12. 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)

13. 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

14. 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)

15. 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.)

16. 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

17. 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.

18. 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

19. Questions? Comments? Adam M. Horst Government Efficiency and Financial Planning Indiana Office of Management and Budget ahorst@omb.in.gov