Budget & Tax
Steve Anderson | March 4, 2016
State Employees Can Help Solve Oklahoma’s Budget Crunch
The recent media coverage of the state’s budget condition has resulted in a plethora of ideas on how to deal with the situation. Some of the ideas have merit, while others (such as raising taxes) are simply counterproductive.
There are plenty of sensible solutions which don’t involve extracting more money from our fellow citizens.
I have been in a position to view state budgeting processes in multiple states, including Oklahoma. When I was appointed by Governor Sam Brownback to serve as budget director in Kansas, I inherited a staff from the Gov. Kathleen Sebelius era that was significantly larger than what I needed. Rather than restructuring the office and eliminating positions to achieve savings, I asked the employees to help me.
My prior experience in the private sector had taught me that those who perform tasks often can pinpoint the areas where savings can be found. If incentivized to share those ideas, these employees will drive change that is effective and is welcomed by the employees themselves.
My pitch to the employees was basically this: Show me ways we can reform our processes while improving our service delivery. Every time an employee leaves, we will share 50 percent of that person’s salary as pay raises for those taking on the tasks of the departing employee.
You’ll notice I said 50 percent of the departing employee’s “salary,” not “compensation” (which includes benefits paid by the state). The carrying cost of the benefit load was approximately 34 percent of salary for the employee group I oversaw in the Division of Budget (DoB). Given that these were all employees with at least one master’s degree, the average salary of the line workers was more than $60,000.
With a salary of $60,000 the cost of benefits is $20,400. So when an employee departed, I was able to give $30,000 to the staff—while saving the taxpayers approximately $50,000.
Over the course of the first 18 months, raises for the remaining employees ranged from $7,700 to $10,000 per employee—all while the service level in the department increased.
For example, we began a real-time feed of information to the governor and his staff via a secure messaging system using iPads to send updates even as committee meetings were taking place. Those same i-Pads allowed the employees to be tied into the DoB database and email system, permitting them to do work during slow times in committee meetings (previously they were doing this work every evening after committee meetings closed). This effectively saved an average of 1.25 hours per employee workday every day over a 90-day session.
In other words, for every employee in DoB we saved 112.5 hours per session, which, together with other process changes, allowed me to not hire one single new employee—even as staff was reduced by roughly 25 percent as employees took a job with another agency or reached retirement.
These savings were compounded by DoB’s rent savings, which totaled more than $22,000 over the same period due to reduced space needs.
In addition, there were computer software/hardware and other office overhead costs that were eliminated through the workforce reductions.
To its credit, Oklahoma already has a rewards program for state employees who find efficiencies—but the rewards are only one-time rewards. I encourage Oklahoma’s political leaders and agency heads to consider this approach I used at DoB. Policymakers would be wise to enact a statute specifying there must be a permanent reduction in FTEs and a net savings from the drawdown.
My experience tracks perfectly with a wise observation made by Mitch Daniels—the former director of the federal Office of Management and Budget, former governor of Indiana, and current president of Purdue University—on rooting out government waste.
“There are only so many places,” he says, “where you can take a cleaver and take a great big piece of fat out. The issue—and I really see it in higher ed—is the fat is marbled throughout the animal. And so you have to be willing to look everywhere. And you have to try to get others in the act, not do this top-down.”
Steve Anderson (MBA, University of Central Oklahoma) is an OCPA research fellow. A Certified Public Accountant with more than 30 years of experience in private practice, he is currently a partner at Anderson, Reichert & Anderson LLC. Anderson spent two years as a budget analyst in the Oklahoma Office of State Finance, and most recently served as budget director for the State of Kansas. At one time he held 17 state teaching certifications, ranging from mathematics to physics to business. This article was originally published in the Tulsa World.
A Certified Public Accountant with more than 30 years of experience in private practice, he is currently a partner at Anderson, Reichert & Anderson LLC. Anderson spent two years as a budget analyst in the Oklahoma Office of State Finance, and most recently served as budget director for the State of Kansas. At one time he held 17 state teaching certifications ranging from mathematics to physics to business.