THE GOVERNMENT PERFORMANCE PROJECTReport Card: New Hampshire FINANCIAL MANAGEMENT: B- In December 1997, New Hampshire's supreme court declared the state's system of financing schools through local property taxes unconstitutional, because it led to inequity between communities. The legislature appropriated an additional $62 million in local education aid for next year, but that won't solve the problem. In a state with no broad-based taxes, the challenge of equalizing $1.3 billion in school funding is daunting—and may require restructuring the entire tax code in years to come. Fortunately, New Hampshire's general fiscal condition has improved somewhat in recent years. At the end of fiscal year 1996, the state had a $44 million deficit, as calculated on generally accepted accounting principles. Last fiscal year, there was a positive balance of $41 million. Like Connecticut, the state uses a less-than-desirable budgetary accounting system in which expenditures are recognized when paid but revenues count only when accrued. Managers say this hasn't caused problems because they also keep an eye on GAAP statements during the budgetary process. But they're open to changing this process. The rainy day fund is at 2.1 percent of general fund expenditures. The Health Care Transition Fund has been reduced from $99 million to $38 million as the state wrangles with the federal government over Medicaid. "We think they have an obligation to pay for certain programs," says one budgeter. Most other financial management practices are solid, including cash and debt management and the use of fiscal notes. CAPITAL MANAGEMENT: C Agency capital plans go forward six years in New Hampshire, which is a long time, but the plans vary in quality. State officials do a good job at double-checking estimates of project costs before submitting them to the governor. There is no long-term statewide capital plan other than a two-year budget. With its low population and aversion to spending, New Hampshire's capital agenda can usually be boiled down to a couple of major projects. The state has a property inventory, but it's not available on a centralized database. This doesn't trouble staffers. "We haven't lost a building in ages," one says. Each agency is responsible for requesting sufficient funds in the operating budget to maintain capital assets. The state has no estimates of the cost of fully maintaining assets. Figures of actual maintenance funding are also lacking. HUMAN RESOURCES: B New Hampshire has no statewide workforce planning, but agencies make a sincere effort to look forward, and the central personnel office works closely with them to help predict coming needs. Specific personnel changes that accompany new programs are included in agency proposals. For some time, agencies complained that the hiring process was too slow. When the state studied the problem, it discovered that the problems were mostly "self-inflicted time delays." The central human resources system is reasonably speedy in its efforts. New Hampshire has a comprehensive training program, and advertises training classes in its own biannual publication. Some 55 different programs are offered, plus 15 additional computer classes. Last year, about 4,000 people went through one of the training classes. The state also offers a Public Certified Supervisor and Public Managers Program. New Hampshire has reduced its number of job classifications from 1,500 in the early 1990s to a more manageable 1,100. MANAGING FOR RESULTS: D+ Until recently, there was little movement here toward the use of measures that relate to actual results. A number of agencies keep track of outputs—the number of people they're serving or the number of phone calls they receive—but, by and large, these are not used for management purposes. A 1997 law called for pilot projects in performance-based budgeting. There has been no motion thus far, but the governor wants to get five or six agencies into the pilot. The incentive being offered to them is increased budgetary flexibility. Most major agencies create their own strategic plans, but there is no requirement that they do so. Statewide, the only strategic planning is taking place in the area of information technology. The two-year gubernatorial term does not encourage long-term thinking. INFORMATION TECHNOLOGY: C New Hampshire has a comprehensive integrated financial management and human resources information system. It meets ongoing needs but is not useful for providing customized reports that managers would like. The state is focusing on making the current system Y2K-compliant before it looks at replacements. Most agencies cannot use data systems (or even e-mail) to communicate with each other. However, a State Unified Network is being designed to connect them within the next year. In a state with little strategic planning of any sort, the fact that IT is beginning to have a formal planning process is impressive. However, it's a new effort, and the plans developed by agencies thus far are mostly lists of desired procurements, with little in the way of strategy. One positive note: The state is trying to incorporate more knowledge of technology in its management training; so even managers who aren't directly involved in IT will have a better idea how to use it in their programs. New Hampshire's chief information officer originally reported to the governor, but that raised concern that the position risked becoming politicized; the CIO now reports to the commissioner of administrative services. AVERAGE GRADE: C+
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