THE GOVERNMENT PERFORMANCE PROJECTReport Card: New Mexico FINANCIAL MANAGEMENT: C- There's tension in New Mexico's fiscal process, centered on a fundamental dispute between the budget office, which wants agencies to have more flexibility to manage appropriations, and the legislature, which thinks there's too much flexibility already and wants to maintain as much control as possible for itself. There's no question that the agencies live a restricted life. Money is appropriated to them by line item, and many of the items are highly specific, precluding the option of moving money around as needed. At its core, this is a dispute between a Republican administration and a Democratic legislature that do not trust each other. It is unlikely to resolve itself soon, and the result is a continuing state of budgetary confusion. Agency books are audited, but the statewide financial report is not. New Mexico aims to present a complete set of audited books for inspection sometime in 2001. Even the unaudited financial statements sometimes take nine months or a year before the public gets a chance to see them. Other financial matters have improved some. Due to favorable economic conditions, the balance between revenues and expenditures looks better now than it has for years, and the state's rainy day fund is more than 5 percent of recurring appropriations. After years of lowballing Medicaid and corrections estimates, New Mexico may have Medicaid costs under control through the use of managed care. Corrections expenditures are still coming in above appropriations, and require annual supplementals. CAPITAL MANAGEMENT: D All of New Mexico's agencies, colleges and universities submit four-year capital spending plans. But the state has a unique system for deciding who gets money. By tradition, funds for capital expenses are divided three ways: The governor gets a third and the Senate and House each get a third. The legislature tends to spend its cash on local projects, while the governor's portion goes to state buildings. A sensible ordering of priorities is next to impossible. "Generally, we try to do too much and don't fully fund the highest-priority projects," says state budget analyst Tim Berry. Projects are tracked by the general services division, and information is provided about their status on a quarterly basis. There are, however, no centralized inventory of assets or statewide policy for asset maintenance. HUMAN RESOURCES: B- New Mexico has made enormous progress in providing greater flexibility to agencies for hiring and rewarding employees. In July 1997, the state shucked its old hiring systems, allowing agencies to recruit for specific jobs rather than generic job titles and getting rid of limited hiring lists. Managers also can reward employees through pay increases that are tied to annual evaluations. New pay rules are helping to get lower-paid employees to the midpoint of the salary range. The state still has 1,100 job titles, which it hopes to reduce to below 500 by July 2000. It has a problem with high turnover, which means it could probably use some centralized workforce planning. Right now, the bulk of such efforts has taken place in the IT area and within some agencies. MANAGING FOR RESULTS: D+ New Mexico not only hasn't been managing for results, it has had a hard time accepting the validity of the idea. Now, some state leaders are trying to move in this direction, but they're faced with starting from scratch. Most cabinet agencies do create some kinds of measures—mostly measures of outputs. But it's too early to tell what effect this is having. Though good intentions are abundant, right now the effort is little more than a paper exercise. Legislation proposing a statewide strategic plan has failed twice in New Mexico. The governor does require individual agencies to prepare annual strategic plans, and these seem to have improved in quality the second time around. The governor's office and the legislature are planning a performance-budgeting pilot for the year ahead that will involve selected programs in six to eight agencies. Developing any enterprise-wide goals will be difficult here anytime in the near future. Agencies savor their independence, and a whole array of independent boards and commissions further fragments the governmental process. INFORMATION TECHNOLOGY: C New Mexico's first chief information officer came on board in September of 1996. "There was no staff, no office, nothing," says CIO Jim Hall. Since then, standards have been put into place for personal computers, software applications and other technology, and the standardization process is moving forward. The state still has a long way to go. Major IT systems offer a reasonable amount of operational support, but the systems are all free-standing and don't support cross-functional analysis. Meanwhile, about half the agencies run their own networks, which makes data-sharing very difficult. The CIO's power in New Mexico emanates largely from his impact on the planning process. "I have a lot of influence over who gets what money," Hall says. Each agency prepares a technology plan with guidance from the CIO's office, which then reviews all procurements in light of this work. New Mexico has just completed its first statewide information technology plan, which is much more strategic in nature than those produced by the agencies. AVERAGE GRADE: C-
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