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McCrory team is leading next NC government reform study

By Gary D. Robertson
Associated Press

RALEIGH North Carolina state leaders are once again embarking on a top-to-bottom review of state government. And once again, there’s bound to be resistance to carrying out changes.

The General Assembly last summer gave Gov. Pat McCrory’s administration $4 million through mid-2015 to hire a consultant for the North Carolina Government Efficiency and Reform initiative and report back with its findings. Looking for budget savings and better methods is a common mantra of elected officials and department heads, but formal undertakings to find them are rare.

“This project is a review of policy, personnel and organizations of all government agencies to make it work better for the people of North Carolina,” McCrory said recently in unveiling his agenda this year, adding that his goal “is to identity opportunities for improving services and saving money.”

The NC GEAR report is due in February 2015. The consultant should be hired by the end of the month. Since legislators aren’t involved directly in the study – unlike other recent efficiency projects – McCrory may have a greater task in persuading lawmakers to support the most dramatic changes that need their formal approval.

“The problem is not going to be whether there will be recommendations, or whether they’ll be good or bad. It’s whether or not there’ll be enough will to implement what is recommended,” said Sen. Fletcher Hartsell, R-Cabarrus, co-chairman of a legislative panel that examines efficiency and program performance in state government.

The government reform concept is important to McCrory, who came into office on a platform of fixing what he called a “broken” state government and put NC GEAR in his first budget proposal.

He’s had mixed success. While he has spearheaded efforts to increase office hours and decrease wait times at the Division of Motor Vehicles, the Department of Health and Human Services, which receives $18 billion in federal and state funds annually, has struggled with two computer system rollouts and a privacy breach.

Hartsell started in the legislature in the early 1990s, when lawmakers and business notables, with a consultant, led the Government Performance Audit Committee; after 18 months, the committee made 350 recommendations projected to save $1.2 billion. While some GPAC recommendations were carried out, most were rejected or set aside for another day.

Still, GPAC led lawmakers to clean up the state’s information technology operations, create a dedicated repair fund for government buildings and eliminate hundreds of positions in the Department of Public Instruction. GPAC was still being cited 20 years later when state officials agreed to close more aging prisons. Legislators ordered a smaller study in 2006 that led to the creation of the Program Evaluation Division, a permanent watchdog agency in the legislature.

Previous governors – notably Republican Jim Holshouser and Democrats Bob Scott and Mike Easley – also had consolidation or efficiency efforts. McCrory’s review is being led by State Budget Director Art Pope. But NC GEAR’s key manager is Joe Coletti, once a fiscal analyst at the conservative-leaning John Locke Foundation, to which Pope has been closely linked over the years.

NC GEAR “is a once-in-a-generation opportunity to improve state government,” Coletti said by email.

Among other things, NC GEAR will examine state government’s organizational structure and its long-term liabilities to its employees, such as pensions and retiree medical coverage. NC GEAR also wants to evaluate whether regulations may be harming government and economic performance, as well as scrutinize the use of federal funds in carrying out government functions.

While roughly $20 billion has been spent annually from state coffers for the annual government budget in recent years, federal funds spent by the state soared from $10.5 billion in 2006 to $18.1 billion in 2013, according to Office of State Budget and Management data. About half of the increase was attributed to federal unemployment benefits.

Lee Teague, NC GEAR’s communications chief, said he sees an advantage in having the executive branch lead the study.

“Unlike the legislature, we don’t have any sacred cows to protect,” Teague said. “We can step back, take a broader view – take a different perspective than a group that’s in one particular agency or one particularly area.”

Coletti said in an interview he expects NC GEAR’s findings will help policymakers evaluate whether the Department of Health and Human Services should be split up or major responsibilities like Medicaid be spun off into a new department. McCrory made waves when he asked recently: “As I look at DHHS, we’re asking the question: Is it too big to succeed?”

Rep. Nelson Dollar, R-Wake, and senior chairman of the House Appropriations Committee, cautioned last week that any proposed DHHS breakup would be difficult because large programs within – such as Medicaid and mental health – are intertwined with federal and state money.

NC GEAR’s measure of success could be whether it becomes a dog-eared reference guide that state officials routinely cite in policymaking so, Coletti said, “it doesn’t end up being dusted off in 15 years.”

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