THE GOVERNMENT PERFORMANCE PROJECTReport Card: Virginia FINANCIAL MANAGEMENT: A Virginia works relentlessly at financial management. Revenue and expenditure estimates are not just accurate, they're well publicized. Anybody who wants to hold the state accountable has the tools. And there's really only one conclusion that they can come to. All three rating agencies give Virginia a triple A. The projected rainy day fund for the close of the current biennium is at a full 6 percent of general fund expenditures, and it may exceed even that. Investment policies are top-notch; they were redesigned in the mid-1990s after a process of revision that searched out the best practices in other states. Now, the other states are benchmarking on Virginia. Officials boast that the state treasury has "never been as structurally in balance as it is right now." They may be right. Virginia budgeters do worry about a combined unfunded liability of $138 million in the state's retirement systems. But they expect to have all of them fully funded within five years. Department heads in Virginia can easily move cash between line items. In fact, line-item reporting is used only so that managers can review their detailed spending patterns. The state recognizes the utility of cost accounting, and is redesigning the state accounting system to complement activity-based costing. CAPITAL MANAGEMENT: A Virginia was one of five states identified by a recent U.S. General Accounting Office study as leaders in capital decision making. The GAO took note of its maintenance reserve program, which sets aside general fund dollars for agencies' needs. Each year, the agencies submit plans that identify total maintenance requirements, report on progress in completing funded projects and prioritize all active maintenance work. The state then allocates dollars based on agency needs, compared with total statewide needs. The current budget includes $67 million for such maintenance projects, reducing the statewide unmet maintenance reserve need to $219.1 million. In 1992, the commonwealth initiated a six-year capital planning process. Plans are updated every two years, with agencies ranking their requests in priority order. After careful review, the plan is published by the state, and the first two years are included in the governor's budget. Quality assurance programs closely assess deviations in new projects from national and state standards. HUMAN RESOURCES: B It's difficult to evaluate Virginia's hiring practices because the state has been under a hiring freeze until recently. But the state has made some sensible decisions: It has reduced the number of job classifications from 2,300 to about 1,800, and eliminated standardized testing for most positions. The governor plans to develop a new human resources agenda based on a mammoth survey of all state employees. After years of claiming to favor performance-based pay, Virginia seems finally to be moving in that direction. Performance raises of 4.55 percent are scheduled to take effect for the 10 to 12 percent of the workforce rated as exceptional or better. Training hasn't been a strength here. The state's Division of Training was downsized by budget cuts a few years ago, so there has been little central oversight. There is also no official workforce planning effort, though the integrated efforts at strategic planning and budgeting help a lot. MANAGING FOR RESULTS: A- Virginia is at the cutting edge of this evolving discipline—excellent examples of outcome measurement are easy to find. One notable effort compares recidivism rates for troubled juveniles under various approaches, such as boot camps, halfway houses, probation and standard correctional facilities. In the current biennium, all agency requests for new funding had to be accompanied by performance measures and targets explaining what the funding was meant to accomplish in service delivery. All told, the commonwealth tracks some 514 different outcome measures. Even so, as one close observer says, "there are a lot of fundamental state activities that we don't measure." Strategic planning is practically a religion in this state. It's tied to the budget process and even utilized (though not required) by a number of non-executive-branch agencies. In January, the governor released the first statewide strategic plan that included specific success measures. INFORMATION TECHNOLOGY: A- Virginia's centralized IT systems provide a great deal of information for its managers. The state is moving toward a total integration of systems to make the data available more quickly and easily. There is no off-the-shelf software that will fully integrate the performance-based budgeting process with the accounting process, so Virginia is working to create its own. A new human resources system is coming on line as well. The IT effort is centrally coordinated by a powerful chief information officer who not only oversees the internal management efforts but also works to attract new technology businesses to the state. Strategic information planning is top-notch, with solid coordination between statewide plans and agency plans. A huge array of information is easily accessible to citizens through the state's Web site. Technology training could be better. The acquisition process leaves something to be desired, too, with large, complex procurements taking six months or more. Part of the problem is that IT purchases are governed by the Virginia Public Procurement Act—a statute not designed for the fast-moving high-tech world. AVERAGE GRADE: A-
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