THE GOVERNMENT PERFORMANCE PROJECTReport Card: Massachusetts FINANCIAL MANAGEMENT: B For decades, revenue estimating in Massachusetts was an act of political gamesmanship, with parties and factions eagerly cooking up numbers to their own advantage. But the games are over now. Today, revenue is estimated by consensus, with the legislature and the executive branch both involved, and the process has proven accurate. The state also has done quite well in predicting expenses (though an expansion of the Medicaid system last year caused that program to come in 4.4 percent over budget). Massachusetts spends conservatively these days—it recently raised the ceiling for its rainy day fund from 5 percent of total budgetary revenues to 7.5 percent (the fund is now at about 6.6 percent). Though debt levels are still high, the state has been aggressive in restraining and restructuring its debt. Controls on agency spending tend to be somewhat rigid. It is difficult to move money around between line items without budget office approval. Curiously, after several years of on-time budgets, the most recent one passed almost a month late. "It was easier to budget when there was no money," says one participant. This year, he says, "everyone's expectations were high." CAPITAL MANAGEMENT: B+ Agencies in Massachusetts have become very effective at nailing down the costs of their capital projects, and there is a reason: The state requires that they self-fund any projects that go over budget. A statewide reporting system provides information on ongoing and anticipated capital projects, including fiscal data, project milestones, construction and contracting details. In 1991, the Bay State began producing five-year capital expenditure plans. But while the executive side plans, the legislative side goes about politics as usual, authorizing far more projects than can actually be attempted. As in Pennsylvania, the governor picks which projects are funded, thus getting the state back on plan. Agencies have been pretty much on their own in maintaining assets, but the legislature has begun a new reserve fund for extraordinary maintenance needs. HUMAN RESOURCES: C+ Massachusetts' personnel modernization has been stymied by an inadequate computer system that doesn't help with sophisticated workforce planning. A new computer is supposed to be in place next year. The state is also constrained by civil service rules. It does a great deal of formalized testing, with agencies offered lists of the top three qualified candidates. On the other hand, it's trying to cut the number of job titles. The number is down to 1,100 now, and should be somewhat lower by early summer. There is pay-for-performance for managers in Massachusetts, but non-manager pay is determined by collective bargaining agreement. Employees can be denied annual raises if they are performing below minimum expectations, but that's an unusual event. The state emphasizes training. The Human Resource Department's training catalog recommends agencies allocate 1 percent of their operating budgets to training and provide a minimum of 30 hours every year. Unfortunately, because of the antiquated computer system, the state has no idea whether the agencies are paying any attention. MANAGING FOR RESULTS: C Great progress has been made in this area in the past five years, but it has far to go. Agencies are still mostly using output measures, though the state is leading them in the direction of more results-oriented outcome data. One particular bright spot: The Budget Bureau is doing an excellent job at moving toward a results orientation with its contractors. About $1 billion worth of contracts are now under performance controls, with more to come. One major stumble: In 1993, the budget office put an enormous amount of effort into performance-based budgeting. The legislature didn't understand it, like it, or want more of it. So the project was dropped, and the budget office doesn't want to go near anything similar anytime soon. Even so, a growing cadre of executive branch budgeters and some members of the legislature are making good use of measurement information. INFORMATION TECHNOLOGY: C Information management is a mixed bag in Massachusetts—the accounting and budgeting systems feature an integrated database of information that's easily available to managers, while the statewide personnel system can't generate useful data. Many of the state's agencies run stand-alone systems that would benefit from consolidation. There are a couple of dozen different systems related to the state's welfare business alone. Massachusetts has a decentralized telecommunications system, and although logic would dictate some form of unification, the will to bring that about has been missing. "There's a huge amount of parochialism and a real desire not to give it up," says David Lewis, acting IT director. Generally, the state's IT procurement efforts are good, with one interesting innovation: Every spring, the state holds something called the "Big Buy." All agencies with money to buy PCs do so at that time, rather than returning the money to the general fund. This enables the state to make a massive one-time purchase, and get costs down to the bone. Most funding for major IT systems in Massachusetts has been accomplished through bonds—which requires a reasonably high level of scrutiny, including cost-benefit analyses. AVERAGE GRADE: B-
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