Indiana

Just a few years ago, the major criticism of Indiana’s finances was that they were simply too conservative. The state had no long-term investments beyond its pension program and had accumulated a gargantuan $1.6 billion of reserves between its rainy-day fund and year-end general treasury balances. Critics were concerned that the state might be denying its citizens some affordable services or tax cuts because of its insistence on keeping money under the fiscal mattress.

Oh, to have such problems again. Right now, Indiana faces a $600 million deficit and has become heavily reliant on single-shot funding gimmicks to pay its ongoing bills. It has short-changed its Public Deposit Insurance fund to the tune of $30 million, and been forced to withdraw $380 million from the Pension Stabilization fund. Meanwhile, the one major fiscal problem Indiana suffered from a few years ago — a dramatically underfunded Teachers Retirement Plan — is no closer to solution than it ever was.

Indiana got in trouble in much the same way other states did when the recession hit in 2001. As the economy plunged, so did tax revenues, and even the rainy day fund could last only so long. What made Indiana different, however, was a decision to continue spending as though the recession hadn’t happened. When legislators voted on their 2003-04 budget, they knew that there were deep holes that would eventually require as much as a billion dollars to fill. They approved the plan anyway. Even a laudable revision of the state’s tax system, under the late Governor Frank O’Bannon, did not keep pace with escalating costs. So state programs and services have struggled through a 7 percent across-the-board cut, followed by a 5 percent cut. And this has just been playing catch-up.

Money C Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting People C Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance Infrastructure B- Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination Information C Strategic Direction Budgeting for Performance Managing for Performance Program Evaluation Electronic Government • Population (rank): 6,080,485 (14) • Average per capita income (rank):    $28,783 (35) • Total state spending (rank):    $22,205,168,000 (18) • Spending per capita (rank):    $3,606 (44) • Governor: Mitch Daniels (R) • First elected: 11/2004 • Senate: 50 members: 17 D, 33 R • Term Limits: None • House: 100 members: 48 D, 52 R • Term Limits: None

In 2003, Indiana’s Government Efficiency Commission — a legislatively created citizen task force — set about trying to find ways to close the fiscal gap by improving efficiency and reducing waste in public management. It was a good idea in a time of severe need. But the unfortunate news out of Indianapolis last year when the commission issued its report was that it simply couldn’t reach many conclusions, much less make detailed recommendations.

The reason was that the state had little idea how much it cost to deliver many of its services. The Indianapolis Star reported that the commission had been unable to receive accurate answers to such simple questions as, “How much does the state spend each year on information technology?” Without knowing how much something costs, it’s pretty hard to figure out if it costs too much.

There is no statewide strategic plan in Indiana. For the most part, agencies are left to their own devices to figure out how their goals and objectives fit the public good. Some of the agencies, such as Corrections and Health and Human Services, manage to do an excellent job at setting performance targets, but the state as a whole hasn’t been much engaged in the process.

The absence of a statewide workforce plan has created difficulties in recruiting workers. Many agencies simply depend on the state job bank rather than actively trying to attract new employees for themselves. Appraisal of employee performance isn’t particularly good, either. There is a decent system technically in place, but managers are not often held accountable for completing the individual assessments.

One positive point of note: The state’s Transportation Department prioritizes projects well, taking appropriate advantage of public input, and is experimenting with new ways to get road projects completed more quickly. In a so-called “hyperfix” project last year, it replaced 35 lane-miles of pavement and 33 bridge decks in 55 days — 30 days ahead of schedule. Thanks to a massive public communications effort and remarkably well-coordinated planning among various alternative modes of transportation, the DOT actually shut down two interstate highways with few complaints. In fact, the public comments were overwhelmingly positive.

For additional data and analysis, go to: http://results.gpponline.org/indiana

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