THE GOVERNMENT PERFORMANCE PROJECTReport Card: Minnesota FINANCIAL MANAGEMENT: A- Minnesota is spending more than it is taking in this year, but that is due primarily to a billion dollars in one-time-only tax rebates and capital expenditures. There are concerns about coming pressure for more spending on education, salaries and tax cuts, but the fact is, Minnesota nearly always handles fiscal matters responsibly: As one observer says, "Structural balance has almost become a mantra here." Indeed, Minnesota has turned the traditional idea of preparing for revenue shortfalls on its head; it actually plans ahead for the use of extra cash, should it come in. "It's been a little bit of political discipline," says Peggy Ingason, state budget director. "It's taking money off the table." In most financial management areas—investment and debt policy and financial reporting among them—Minnesota is as good as you'll find. One area that could be improved is cost accounting, now mostly limited to some of the larger agencies. CAPITAL MANAGEMENT: A- Minnesota has a very impressive planning process. Agencies put together six-year capital plans, which are then integrated into six-year strategic plans. Budgetary action is taken on the first two years. Agency requests must be prioritized, and must identify the cost impact of the request on the agency's operating budget. This system balances the need to maintain and re-use existing assets with demand for new facilities, and targets a reduction of the state's deferred maintenance backlog as a major goal. Since 1992, the state has aggressively pursued measures to evaluate the condition of its capital assets. This past year, the legislative auditor estimated deferred maintenance to be in the $300 million to $600 million range. Because most of the money for maintenance comes from operating budgets, it's easily shortchanged, and a multi-agency task force is currently exploring ways to require that enough money be spent in this area. HUMAN RESOURCES: C+ Minnesota's human resources system has long been rigid, centralized and antiquated. That is changing—and rapidly. The state's Department of Employee Relations has altered its mission from that of a powerful centrally controlling force to that of a consultant, setting agendas and retaining oversight responsibility. The state is engaged, for the first time, in workforce planning. The how-to manual for accomplishing this at the agency level has already been completed, and will be used in pilot agencies this year. Second, Minnesota is transforming its narrowly focused classification system (with some 2,300 job classes) to one based more upon the job skills of the individual employees. Finally, the state is working on a brand-new hiring system to replace one that's seriously out of date. It will give agencies far more control over whom they hire and reduce hiring time by at least one-third. Now, most testing for job applicants is developed, administered and supported centrally by Employee Relations. However, experiments are underway to move this selection process "closer to home" through computerized testing. One big question mark here: Many of these reforms are contingent upon sufficient legislative funding in the months to come. MANAGING FOR RESULTS: B Minnesota Milestones, one of the first goal-oriented statewide performance plans, has had a rocky history. The reasons are simple: Governor Carlson wasn't a strong advocate; the legislature wasn't a strong advocate; and the governor and legislature didn't get along. Nevertheless, Minnesota Milestones has gone a long way toward focusing the state on a variety of high-level goals. And beyond the master plan itself, the state has made important advances in results-oriented management. For more than five years, agencies have been required to produce performance reports that chart their progress toward agreed-upon targets. About three-quarters of state activities (not programs, but individual activities) have, or soon will have, outcome measures. The state has taken notable steps in measuring performance in education and the environment. Every three years, it conducts a massive survey of sixth, ninth and 12th graders to assess progress in reducing drug and alcohol use and smoking. Nearly all of this information is available to the public on the Internet. INFORMATION TECHNOLOGY: B Minnesota maintains reasonably up-to-date centralized information systems, which deposit a great variety of useful data into warehouses set up to allow trained managers to manipulate it. Budgeting is done through a comprehensive statewide system used by all agencies and the legislature, providing a common background for its development and analysis. Minnesota's chief information officer reports directly to the governor. Minnesota has compiled its second statewide master plan for technology. The first was largely a visionary document, according to an Office of Technology official. But the state has now integrated this strategic approach with its real-world technology efforts. One major obstacle in IT here is the lengthy procurement process for major acquisitions. It can take more than half a year to acquire a large system, though reform has begun. Meanwhile, the state is grappling with the challenge of requiring agencies to justify their acquisitions with cost-benefit analysis. Minnesota's Web site points users to a wide variety of state government information resources. There is one potential stumbling block, however: a Minnesota law stating that data cannot be used for other purposes than those for which it was collected. This hasn't been much of a problem yet, but it likely will be as use of the Internet grows. AVERAGE GRADE: B
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