Kentucky

It’s not always possible to differentiate between the impact of management and politics on a state’s ability to control its fiscal destiny. But Kentucky seems to have a kind of managerial bi-polar disorder. The arsenal of administrative tools it has accumulated over time is terrific. On the other hand, the state’s political leadership has brought many of its processes to a standstill unparalleled in Kentucky’s history.

The list of things the state does well is long and deep. It utilizes consensus revenue forecasting that over the years has been commendably accurate. Its fiscal notes process for predicting program costs, overseen by both the legislature and the executive budget office, is a very powerful tool to keep expenses in line. Pension funds are solidly stocked. Cash management is superb. Procurement is another strength; all agencies are required to make their purchases electronically through pre-approved vendors, which can save a great deal of time and money.

Given such underlying stability and control, it’s remarkable what a mess the legislature has created. In 2002, the Democratic House and Republican Senate failed to reach agreement on a biennial budget. Democratic Governor Paul Patton had to put an emergency spending bill in place until legislation was finally enacted in 2003. Republican Ernie Fletcher, Patton’s successor, has faced the same kind of stalemate and has had to impose two more emergency plans to keep the government from shutting down altogether.

Money B+ Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting People B Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance Infrastructure B+ Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination Information B Strategic Direction Budgeting for Performance Managing for Performance Program Evaluation Electronic Government • Population (rank): 4,041,769 (25) • Average per capita income (rank):    $26,252 (41) • Total state spending (rank):    $18,407,007,000 (23) • Spending per capita (rank):    $4,500 (24) • Governor: Ernie Fletcher (R) • First elected: 11/2003 • Senate: 38 members: 15 D, 23 R • Term Limits: None • House: 100 members: 57 D, 43 R • Term Limits: None

The effect of this debilitating warfare is that the state has been unable to make any progress with worthwhile new programs. Large and clumsy across-the-board budget cuts have been required merely to keep existing programs funded. The deputy budget director, Bill Hintze, uses the words “keen disappointment” to describe the situation. To many in state government, that might sound like an understatement.

For those inclined to optimism — or perhaps just conservatism — there is a silver lining here. With no valid mechanism for new spending, Kentucky’s finances are being managed penuriously. As a result, in spite of the fiscal confusion, the state’s rainy day fund has grown from $50 million last year to $130 million now.

Also on the positive side, efforts to introduce new levels of efficiency through reorganization have continued, despite the budget stalemate. Fletcher wisely decided that there was no need to mark his turf by altering efforts that were already underway and successful. With a structure of performance management in place, says Ann Lovejoy, the director of government training, “there was no reason to reinvent the wheel. We are just filling in the gaps.”

Reorganization has provided a significant opportunity to track the goals of one department against the goals of others. It has demonstrated, for example, that the state’s mining agency was dealing with the same water-quality issues as the environmental agency. In some cases, employees from both offices showed up on the enforcement end without any communication between the two. After identifying this internal coordination problem, Kentucky has taken steps to resolve it. “Sightlines have now been established,” says Mary Lassiter, the deputy executive director of the Governor’s Office for Policy Research, “along with lines of communication.”

The state’s Personnel Cabinet does well at employee recruitment, making strong efforts to advertise to the younger population, even as far down as middle school. Weak technology systems, however, have hampered the state’s efforts in human resources management, making it difficult to share data. Although a fix has been a top priority for some time, it still has not taken place.

Meanwhile, the Transportation Cabinet has moved into a new state-of-the-art headquarters. The new building includes a “one stop” center for motor vehicle transactions and an operations center for emergencies and weather-related problems on the highways. It’s a big step forward for an agency whose antiquated facilities served as a handicap to the entire state transportation system.

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

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