CORE PROJECTRECOMMENDATIONS

Reorganizing the executive branch

Environmental services

Human services

Budgeting and financial management

Human resources

Rules

Electronic data interchange

Quality improvement initiative

APRIL 1993

This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp

THE CORE VISIONOF STATE GOVERNMENTThe Commission on Reform and Efficiency envisions a Minnesota state government thatis mission driven, oriented toward quality outcomes, efficient, responsive to clients, andrespectful of all stakeholders. These goals are defined below.

Mission drivenState government will have clearly defined purposes and internal organizational structuresthat support the achievement of those aims.

Oriented toward quality outcomesState government will provide quality services. It will focus its human, technical, andfinancial resources on producing measurable results. Success will be measured by actualoutcomes rather than processes performed or dollars spent.

EfficientState government will be cost-conscious. It will be organized so that outcomes areachieved with the least amount of input. Structures will be flexible and responsive tochanges in the social, economic, and technological environments. There will be minimalduplication of services and adequate communication between units. Competition will befostered. Appropriate delivery mechanisms will be used.

Responsive to. clientsState government services will be designed with the customer in mind. Services will beaccessible, located conveniently, and provided in a timely manner, and customers willclearly understand legal requirements. Employees will be rewarded for being responsiveand respectful. Bureaucratic approvals and forms will be minimized.

Respectful of stakeholdersState government will be sensitive to the needs of all stakeholders in providing services.It will recognize the importance of respecting and cultivating employees. It will fostercooperative relationships with local units of government, and nonprofit and businesssectors. It will provide services in the spirit of assisting individual clients and serving thebroader public interest.

- Feb. 27, 1992

CORE.PROJECT

RECOMMENDATIONS

Reorganizing the executive branchEnvironmental services

Human servicesBudgeting and financial management

Human resourcesRules

Electronic data interchangeQuality improvement initiative

BY THEMINNESOTA

COMMISSION ONREFORM AND EFFICIENCY

APRIL 1993

This report is printed on recycled paper using soy-based inkand is entirely recyclable, including its wire binding.

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CONTENTS

INTRODUCTION 1

Project selection 1

Contacts 2

PROJECT SUMMARIES 3

Reorganizing the Executive Branch 3

Environmental services 6

Human services 9

Budgeting and financial management 11

Human resources 13

Rules 15

Electronic data interchange 17

Quality improvement initiative 18

CONCLUSION 21

T he Commission on Refonn and Efficien­cy (CORE) was created by Gov. ArneCarlson and the 1991 Legislature (Laws

of Minnesota 1991, Chapter 345, Article I, Sec.17, Subd. 9) to lead a comprehensive effort toimprove the management of Minnesota stategovernment. The 22 commission membersappointed by the governor and the legislaturewere drawn from all walks of life and includeleaders in business, education, and labor, as wellas current and fonner public officials. Arend J.Sandbulte, chair, president and CEO of Minne­sota Power, Duluth, heads the commission.

The commission's work was conducted in twophases. In August 1991, CORE began to addressits initial charge to identify $15.7 million ingeneral fund savings during the 1992-93 bienni­um. The result of CORE's first project was theidentification of 23 program and budgetaryactions totaling $17.5 million in general fundsavings and $21 million in total savings. Ulti­mately, $11.2 million of CORE's general fundrecommendations were adopted by the governorand legislature.

The commission then turned its attention to itssecond mandated responsibility; recommendinglong-tenn actions for improving state govern­ment efficiency and effectiveness. Unlike thecommission's initial project, where identifyingcost savings was the goal, this project views costsavings as one of several outcomes of improvingthe quality of state government. To develop itsfindings, the commission surveyed employees,intetv.iewed agency management, heard com­ments from those affected by government pro­grams and the general public, developed casestudies of executive branch agencies, and soughtadvice from the academic community.

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INTRODUCTION

This report summarizes the work done by thecommission in this second phase. Although thecommission has reported on nine project areas,all of the projects are closely related and addressthe major goals identified by the commissionbefore the projects were selected.

Project selection

CORE's initial data collection involved contactwith numerous individuals including legislators,state managers and employees, consultants, andfiscal experts. All of these stakeholders wereasked where they saw significant problems oropportunities for refonn in state government,and if they had any ideas for improving the effi­ciency or effectiveness of state government inthe longer run. The responses of the intetv.iew­ees were then entered into .a data base of sugges­tions and ideas for potential CORE projects.

From this data base, CORE staff identified near­ly 40 possible areas for substantive refonn. Pre­liminary analyses of these areas were preparedfor the commission's consideration, highlightingthe existing problem, opportunities for refonn,and resources required to undertake a study ineach area. .

A second set of interviews was conducted withkey legislators, state managers and commissionmembers to identify priority areas for refonn.Based on the analyses presented and a tally ofthe priorities identified by interviewees, thecommission selected nine areas on which tofocus its attention for the second phase of theCORE process. The project areas selected were:

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• executive reorganization

• environmental services

• human services delivery

• budgeting and financial management

• human resources management

• administrative rules

• electronic data interchange

• quality improvement initiative

• local services funding

The last project listed, local services funding,will be completed in the fall of 1993.

Contacts

An extensive effort was made to involve stake­holders in shaping each of the selected project

areas. Four of the Project teams had regularmeetings with stakeholder advisory committeesand all met with stakeholder groups to obtainfeedback.

• More than 2,<XX> people representing stateagencies, boards, commissions, county andlocal governments, the legislature, advocates,employers, and citizens were contacted atmore than 400 individual or group meetings.

• Staff from all 50 states and the federal gov­ernment were contacted to gather relevantinfonnation for CORE projects.

• Data collection was conducted through vari­ous means, including individual and groupinterviews, focus groups, surveys, letters andadvisory committee meetings.

• Presentations were made at numerous meet­ings around the state to gather feedback fromstakeholders.

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PROJECT SUMMARIES

Reorganizing theExecutive Branch

Refonn imperatives

• The governor's span of control (over 26cabinet level agencies and approximately 200small agencies) hampers the ability to com­municate and effectively implement policies.

• The complex executive branch structure blurslines of authority and results in problemswith determining accountability.

• Existing structure and systems fragmentservice delivery.

• Interagency planning, policy development,program management and service deliveryshould be strengthened.

Recommendations

Executive management

1. &tablish a cabinet structure of executiveoffices to provide coordination and integra­tion of related policies, functions and pro­grams. Each executive office should be head­ed by a secretary serving at the will of thegovernor.

2. Provide the governor with a more manage­able span of control by reducing the numberof executives reporting directly to him.

3. Redefine the role and authority of agency

executiveleadership, increasing accountabilityto the governor for service coordination andcustomer focus.

Each secretary would be accountable for thecoordination of policy implementation andservice delivery regardless of departmentjurisdiction boundaries and other traditionalimpediments to cooperation. Deputy secretar­ies would be accountable for achieving theagency's goals and objectives.

4. Consolidate executive-level agency manage­ment.

With secretaries directing agency policyformulation and deputy secretaries directingagency operations, a net reduction of agencyexecutives should accompany implementationof the new system, with additional reductionsto follow.

5. Consolidate agency policy and support servic­es management by placing control of thesefunctions directly under the secretaries.

6. Invest each secretary with the same powersand duties.

Each secretary should generally have thesame power and duties:

• Represent, and act on behalf of, thegovernor on issues related to thesecretary's functional area.

• Advise the governor on the appointmentof deputy secretaries, small agency headsand board members.

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• SupeJ.Vise deputy secretaries and holdthem accountable for their actions.

• Direct strategic planning and policy devel­opment for the functional area assigned tothe secretary.

• Direct the formulation and presentation ofa comprehensive program budget for thefunctional area assigned to the secretary.

• Reorganize and reassign programs, pro­gram budgets and support services toimprove operations among the agenciesassigned to that secretary.

• Resolve administrative, jurisdictional,operational, program· or policy conflictsbetween agencies or officials assigned tothat secretary.

• Coordinate development of legislation,and represent agencies in the legislativeprocess.

7. Invest each deputy secretary with the samegeneral powers and duties.

• Formulate agency planning and budgetrecommendations on behalf of the secre­tary responsible for the agency's function­al area.

• Implement agency plans by directing theagency's operations and controlling theagency's line item budget.

• Exercise all administrative authority notassigned to a secretary.

8. Establish an Executive Office of PublicAdvocacy, consolidating functions nowlocated in a number of agencies.

9. Functionally align all state agencies under theexecutive offices.

The following alignment of eight offices isrecommended:

Executive Office of AdministrationDepartment of AdministrationDepartment of Employee Relations

Executive Office of Business DevelopmentBureau of Mediation ServicesDepartment of AgricultureDepartment of CommerceDepartment of Trade and Economic

Development.Department of Labor and Industryhun Range Rehabilitation and

Resources Board

Executive Office of EducationDepartment of EducationDepartment of Jobs and Training

Executive Office of EnvironmentDepartment of Resource Management

(proposed)Department of Environmental Protection

(proposed)

Executive Office of FinanceDepartment of FinanceDepartment of RevenueOffice of Strategic and Long Range Planning

Executive Office of Healthand Human ServicesDepartment of CorrectionsDepartment of HealthDepartment of Human ServicesDepartment of Veterans AffairsHousing Finance Agency

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Executive Office of Public AdvocacyDepartment of Human RightsConsumer advocacy functions from the

Attorney General's Office and theDepartment of Public SeIVice

Executive Office of Transportationand Safety

Department of Military AffairsDepartment of Public SafetyDepartment of Transportation

Boards, commissions, councils,and advisory task forces

10. Assign each board, commission, council andadvisory task force to a secretary or asecretary's designee. Each secretary couldalign small agencies' staffing and supportactivities anywhere within the agenciesreporting to the executive office.

Advisory bodies

11. Sunset all advisory bodies over a four-yearperiod beginning in 1994. Each secretaryshould recommend whether advisory· bodieswithin their executive office should be rein­stated after their sunset date.

12. Include a sunset date in all new legislationcreating advisory bodies.

Occupational licensing

13. Create a central licensing agency responsiblefor all administrative functions in support ofindependent licensing and examining boards.

14. Sunset all professional licensing over a four­year period beginning· in 1994. Each secre­tary should recommend whether licensingactivities within their executive office shouldbe reinstated after their sunset date.

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Regulation

15. Eliminate the Department of Public SeIVice,transferring its staff and responsibilities tothe Public Utilities Commission. (Advocacyfunctions would be transferred to the Execu­tive Office of Public Advocacy.)

16. Reduce the Public Utilities Commissionfrom five to three full-time commissioners.

17. Consolidate gambling regulation activities bymerging the Racing Commission and theGambling Control Board.

Constitutional offices

Attorney general

18. Allow the governor and agencies to selectin-house (non-litigation) counsel on a com­petitive basis. Continue the role of attorneygeneral as exclusive representative of stategovernment in litigation.

Consumer advocacy

19. Combine the consumer advocacy functionsof the Attorney General's Office with otherrelated advocacy functions in the proposedExecutive Office of Public Advocacy.

State treasurer

20. After establishing a secretary of finance,examine the roles and relationship betweeJ:lthe finance secretary and the state treasurer.

Lieutenant governor

21. Governors should consider the option ofassigning lieutenant governors to serve in asecretarial role.

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Policies and practices

Co-locati.on

22. Agencies should relocate to common facili­ties and, whenever possible, integrate theiractivities to improve service delivery.

Techrwlogy investment strategy

23. Fst3blish a statewide data and technologyinvestment plan to improve both customerservice and the efficiency of state systems.

FJhics

24. The leaders of all three branches of gov­ernment should establish a joint commissionto create a uniform code of ethics for all

,employees of state government.

Transitions

25. The Executive Office of Administrationshould establish transition processes and pr0­

vide training for appointed officials to assistwith their rapid orientation to the complexenvironment of public management.

Connections

The Minnesota model for organization -andstreamlining government functions is a basicstructurefor theproposed environmental selVicesand human selVices delivery systems, whichemphasize the importance ofusing secretaries tocoordinate selVices among departments. Secre­tarial coordination also facilitates consolidationof ndemaking functions in state agencies, asdescribed in the CORE recommendations onadministrative rules.

Environmental services

Reform imperatives

• The system is fragmented and includes morethan 30 state agencies, five state-establishedregional special districts, 87 counties, 856municipalities, 1,801 townships, 41 water­shed districts, 91 soil and water conservationdistricts, and others with environmentalresponsibilities. The separate and clashinginterests represented by the many agenciesand units of government often lead to ad­ministrative gridlock

• The processes are unresponsive to citizenneeds. Cumbersomeprocesses within a com­plicated, centralized bureaucracy impedeprompt decision making and accountability.

• The system is overly prescriptive and reliesheavily on "command and control" regulato­ry processes.

• Dispute resolution processes are time-con­suming and costly and frequently result inlitigation or political conflicts.

Recommendations

Organizational structure

26. Consolidate most state environmental func­tions into two agencies, the Department ofResource Management (DRM) and the De­partment of Fnvironmental Protection(DEP).

• DRM would emphasizeuseand manage­ment of natural resources, while theDEP would stress protecting the envi-

1

II

IJ

ronment from degradation. These agen­cies would be affected in the followingways:

Department ofNatural Resources officeswould be used as a base for housing thedivisions and top management of thenew Department of Resource Manage­ment.

Pollution Control Agency offices wouldbe used as a base for housing the divi­sions of the Department ofEnvironmen­tal Protection.

The Pollution Control Agency Boardwould be eliminated, and its powerstransferred to the Department of Envi­ronmental Protection.

The Office of Waste Management, theHarmful Substances CompensationBoard, the Petroleum Tank ReleaseCompensation Board, and the Environ­mental Quality Board would be abol­ished, with their programs and responsi­bilities transferred· to the DEP.

The Board of Water and Soil Resources(BWSR) would be converted to an advi­sory board to the secretary of the envi­ronment. The board's name would bechanged to Local Government AdvisoryBoard on Environmental Services.BWSR's programs and statutory respon­sibilities would be transferred to theDEPand DRM.

Most functions in the Department ofHealth's Division of EnvironmentalHealth would be transferred to the DEP.

The Department ofTrade and EconomicDevelopment's outdoor recreation grantprogram would be transferred to theDRM.

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27. Establish a secretary of the environment whowould report to the governor and overseethe two departments' programs, budgets andadministration of environmental policy.

• The secretary would be responsible forestablishing a vision and strategic planfor environmental services in Minnesotaand would be held accountable forimplementing the policies to achieve thevision. The secretary would ensure thatthe departments streamline and coordi­nate processes to produce better cus­tomer service.

Service delivery

28. Deliver state environmental services on thebasis of ecoregions and decentralize thestate's environmental employees to theextent possible. Co-located ecoregion officeswould be established and headed by regionalDRM and DEP directors, who would reportto agency deputy secretaries. More opera­tional decisions would be shifted to theregional offices, including most permittingdecisions. Major policy-making decisionsand those decisions with statewide implica­tions would be made at the deputy secretaryand secretary levels.

29. Assign regional office location decisions toa two-agency task force of the DRM and theDEP that would. make recommendations toprovide for regional offices within all eco­regions and would consult with county gov­ernments to solicit input on county boun­daries. The legislature should set a deadlinefor completion of this work, and the taskforce should include employee representationfrom the agency programs being mergedinto the DRM and the DEP. Regional direc­tors should be authorized to rent storefronts

/.;T: and buy or lease used office equipment and

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furniture in the cities selected to house theecoregion offices.

30. Increase the authority of the regional direc­tors by assigning them primary responsibilityfor the performance of the employees undertheir supervision.

31. The secretary, two deputy secretaries, andothercentrnl office managers should inter­pret state law and make decisions withmajor statewide implications. Execution ofpolicy and programs should be carried outas close to the customer or citiml as possi­ble.

32. Create an environmental appeals board com­posed of nine citimls with recognized envi­ronmental expertise and independent, objec­tive judgment. The governor should appointmembers to serve staggered terms, and nogovernor should appoint more than half themembers during his or her term. In makingthese appointments, the governor shouldconsider expertise needed to carry out theEnvironmental Policy Act (Minnesota Stat­utes, Chapter 1160). The board shouldfocus on policy conflicts between environ­mental use and environmental protection, asrequested by the secretary or a citiml. Theboard should decide whether to address orwJect a request so as to limit its workload.The secretary should make staff available asrequested by the board to assist it. Recom­mendations of the board should be sent toboth the secretary and the legislature. Thesecretary should justify in writing any depar­ture from the advisory board's recommen­dations.

33. Convert the Board of Water and Soil Re­sources to a pennanent advisory board to thesecretary of the environment. Change the

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BWSR's name to the Local GovernmentAdvisory Board on Environmental Services.

34. Direct the secretary ofenvironment to estab­lish regional environmental councils, whichwould be convened by the regional directorsof the DEP and the DRM. These councilswould allow the agency administrators tostay in touch with the concerns of citimlsand constituency groups in each region, togauge the effectiveness of service delivery,and to develop and evaluate programs.

Streamline processes

35. Improve the command-and-eontrol approachby standardizing the process of delegatingprograms to local government and the en­forcement tools available in all programs toachieve compliance.

36. Implement a variety of reforms in environ­mental rules that would increase flexibilityand decrease the costs of compliance whilemaintaining environmental protection.

• Create a unifonn environmental codethat bases compliance requirements onoutcome measures.

• Allow regional directors to grant waiv­ers to rules.

• Focus the rule scope to target the mostcommon hazards, rather than every pos­sible hazard.

• At least biennially, the secretary shouldpropose lists of rules that should berepealed because they are obsolete orunnecessary.

• Provide more scrutiny and justificationfor rules that exceed federal standards.

37. Develop alternative approaches to achievingenvironmental compliance, including the

exploration of market incentives, broaderpublic accountability mechanisms, and ex­panded training and technical assistance.

Reduce intergovernmental complexity

38. Establish a process for clarifying and simpli­fying intergovernmental relations in thedelivery of all environmental seIVices.

• Ecoregions should be the focus andorganizing principle for the delivery ofenvironmental seIVices by both state andlocal governments.

• The existing local water planning pro­cess should be used both to examineseIVice overlap and duplication and toestablish needed regional interactions.Planning for media other than watershould follow.

• Regional organization structures thataddress regionwide environmental issuesshould be designed and implemented bythe counties; the state should hold coun­ties accountable so that the outcome ofplanning addresses ecoregion and state­wide needs.

Connections

These recommendations reflect CORE's Minne­sota modelfor organiwtion and apply the modelin detail to environmental services. This projectis also linked with the administrative rules pro­ject, which willfUrther streamline environmentalprotection and regulation by reducing the mon­ber and prescriptiveness of administrative rulesin the environmental arena.

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Human services

Reform imperatives

• The system is highly complex and fragment­ed. For example, persons with developmen­tal disabilities are served by 22 programs, 32funding sources, eight state agencies, 84county social seIVice agencies and 436school districts.

• Programs are prescriptive but are not ac­countable. Minnesota relies on strict adher­ence to programmatic and financial rules ­1,268 pages of administrative rules for theDepartment ofHuman SeIVices alone - butrequires few assurances that programs actu­ally improve the lives of recipients.

• The system is not responsive to customerneeds. Navigating through the myriad ofspecialized programs is like moving througha maze, at best. Clients report that the sys­tem is confusing and complicated, includesperverse incentives, and is often disrespectfulto customers.

Recommendations

Organizational structure

39. Establish a secretary of health and humanseIVices who reports to the governor andoversees the programs, budgets, and admin­istration of state human seIVices agencies.

• State agencies that should be includedunder the secretary of health and humanseIVices are Health, Human SeIVices,Housing Finance, Veterans Affairs,Correctioos, and JEtS ofJd>s and Trnining.

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40. Designate local health and human servicesdistricts (HHSDs) using current communityhealth service district boundaries as a start­ing point. These districts would be createdfor the purpose of local health and humanservices program planning and administra­tion. Services would continue to be deliveredwithin communities. Decisions about districthealth and human services should be madeby county commissioners within a district,with votes proportional to the populationrepresented.

Funding

41. The secretary of health and human services,with the assistance of the health and humanservices districts and the concurrence of thelegislature, should identify target popula­tions, detennine service eligibility priorities,and develop a list of health and social servic­es that are eligible for state funding and thatconstitute a minimum and adequate level ofservices that meet the basic needs of Minne­sota citizens most requiring assistance.

42. Create a new HHSD grant to give localhealth and human services districts greaterflexibility to meet local needs. A basic set ofservices would be agreed upon as the mini­mwn 0l7I1 adequate level of selVices (seeRecommendation 41). All health and humanservices districts would be required .to pr0­

vide these basic services. This basic levelwould be funded with no less than 60 per­cent and no more than 70 percent of avail­able state resources. The remaining 30 to 40percent of state funds would be allocated inthe form of discretionary block grants.

The grant would combine funds from thefollowing current programs: CommunitySocial Services, community health services,Semi-Independent living Services, TItle III

and other non-Medicaid aging programs,non-Medicaid mental health programs, andstate-operated residential care funding.

Outcomes orientation

43. State and local agencies and service pr0­

viders should fully adopt an outcomes orien­tation in budgeting, administration, regula­tion and enforcement, and in direct servicedelivery.

Rulemaking for human services

44. Health and human services rules should notbe written for every possible scenario butrather to target potentially critical situations.These critical situations are those in whichcustomers have no choice about the degreeof risk to which they are exposed and thoseinvolving the financial solvency of providersor provider organizations. Rules shouldoutline minimal acceptable standards, ratherthan the highest possible standards.

45. The secretary of health and human servicesshould be responsible for initiating an agen­cy review and repeal process for existinghealth and human services rules. Prioritiesfor review should be established and thisactivity undertaken as agency resourcespermit.

46. State agencies should permit and encourageregulated entities (such as IlliSDs and pro­viders) to apply for waivers from existingrules.

47. Agencies should investigate and implementnew methods of enforcement. These newways would include more use of conflictresolution techniques; provision of technicalassistance and oversight in proportion tononcompliance occurrences; peer or citizen

review panels; and rewards and incentives,such as public recognition of exemplaryproviders and educational opportunities thatimpart "best practices" principles. Thesecretary of health and human servicesshould be responsible for ensuring that suchmethods are sought and used.

48. Agencies should identify and implementmeaningful sanctions for noncompliance withagency rules and regulations. Agenciesmight develop a conflict resolution proce­dure; increase the use of escalating warningsand probationary status with greater over­sight; require customer or peer review inputto agencies for determination of sanctions;publicly announce the sanction status ofproviders; and shift some funding to anotherprovider, among other options. The secre­tary of health and human services should beresponsible for ensuring that this processoccurs.

Customer focus

49. State and county health and human servicesagencies should clearly define their custom­ers.

50. State and local staff should be empowered toserve their customers.

51. The legislature, state agencies, counties, andproviders should work in partnership toempower customers to achieve their goals.

Connections

Like the recommendations for budgeting and.financial management, these hwnan servicesrecommendations·try tofocus service delivery onresults, rather tJum procedures. The hwnanservices recommendations also complement the

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administrative roles recommendations to encour­age less prescriptive roles and nwre alternativemeans to measure peifomzance outside the nde­making process. The hwnan services stn«:turerecommended by this project reflects the Minne­sota model detailed in the executive reorganiza­tion recommendations.

Budgeting andfinancial management

Reform imperatives

• The budgeting and financial maitagementsystem has historically emphasized inputs,rather than outcomes or program effective­ness. Of the m performance measuresreported by 25 agencies in the 1992-93biennial budget, only 15 percent were evenrough measures of program outcomes.

• System incentives encourage managers tospend as much as they can rather than toconserve public funds.

• The system rewards "business as usual" atthe expense of emerging priorities.

• Although flooded with financial details,policy makers are not given the informationthey need to make the tough choices re­quired.

Recommendations

Performance-based budgeting

52. The state should adopt a fully performance­based budgeting system for resource alloca­tion.

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53. The perfonnance-based budgeting processshould begin broadly with identification ofstate priorities and agency strategic planning,then be continually narrowed down to spe­cific perfonnance indicators.

54. The state should select a single contractor toprovide assistance on a fee-for-service basisto agencies in adopting the perfonnance­based budgeting process.

55. Performance-based budgeting should be usedacross the entire state budget, includinggrants and aid and educational systems.

'Use it or lose it'

56. Agencies should be permitted to carry for­ward any savings from the end of one fiscalyear into the next. Monies could also becarried forward into the next biennium butwould have to be spent by the end of thefirst fiscal year of that biennium.

57. Monies carried forward must be used forinvestments that enhance the efficiency orimprove the effectiveness of the program.Information would be provided to the De­partment of Finance and the chairs of theappropriate legislative committees aftersavings are spent to show where the moneywent and the results of the expenditure.

Legal levels of control

58. The legislature should evaluate the existingstructure of legal levels of budgetary controlto eliminate any levels that are no longerneeded.

59. Legislation should be drafted that would en­courage the inclusion of perfonnance indica­tors in legislation and rules wherever possi­ble, instead of creating additional levels ofcontrol for program monitoring.

Agency transfer restrictions

60. The transfer process for interfund transfersshould remain the same.

61. Agencies should be permitted to transfermonies between programs within the samefund without authorization. The agencieswould inform the Department of Financeand the chairs of the appropriate financecommittees of the transfer once it is com­pleted.

62. All agencies should be given standard trans­fer authority in statute.

Complement control

63. The complement control system should bereplaced with a system of quarterly full­time-equivalent reporting, already availablethrough the state payroll system and usedyearly to provide state employment counts tothe U.S. Department of Commerce for a na­tionwide comparison of public employment.

Connections

The outcome orientation of the budgeting andfinancial management recommendations isreflected in all of the CORE projects. All ofCORE's recommendations demonstrate a newfocus on results, rather than on inputs or pro­cesses. The recommendations for apelj'o171UJJlCeaccountability model- which movesfrom broadgoal setting at the agency level to linking thosegoals to the work plan and pelj'o171UJJlCe ofspecific employees - are directly reflected in thehuman resources management recommendationsfor training and pelj'o171UJJlCe management.

Human resources

Refonn imperatives

• State agencies perfonn no strategic workforce planning.

• A lengthy recruitment and examination pro­cess fails to meet agency hiring needs.

• Complicated layoffprocedures are disruptiveand can result in skilled employees beingremoved from their positions and replacedby unqualified individuals.

• Classification systems are cumbersome andinefficient. The state currently attempts toadminister 2,179 classifications.

Recommendations

Systemwide changes

64. Establish a human resources strategic plan­ning process that includes all three branchesof government. This process should be partof· a comprehensive· strategic plan for stategovernment service and delivery, and itshould fonn the foundation for human re­sources planning in each state agency.

65. Restructure the state's human resourcesfunction through decent:raJ.ization of authori­ties and responsibilities to state agencies.

66. Reshape the state's organizational culturesand values by: clarifying mission, vision andvalues; communicating the neworganization­al values to employees; training employeesin the application of the new values to theirwork behavior and decision making; and

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recognizing and reinforcing behavior basedon the desired cultural values.

67. Continue to develop a human resourcesmanagement information system that cansupport the CORE refonn recommendations.

Hiring and deployment

68. &tablish systems to enhance and facilitatethe flexible deployment of state employees toquickly and efficiently satisfy needs identi­fied through work force planning for short­and long-tenn temporary· assignmentsthroughout the state.

69. Develop a centralized recruiting effort toobtain access to more protected-group appli­cants and to help hiring managers and super­visors recruit for unique, high-level or hard­to-fill positions.

70. Make available a range of assessment tech­niques to qualify and evaluate candidates.

71. Hire for specific jobs, not general job classi­fications. Revise the current system to en­courage the conduct of the hiring process ona position-specific basis whenever feasible.Focus on assessing-candidates on the particu­lar knowledge, skills, abilities, and experi­ence related to the specific position that thehiring authority is seeking to fill.

72. Implement a data base of hiring-relatedinformation accessible to all agencies.

Classification and compensation

73. &tablish a job evaluation structure thatmodifies the current system to clearly identi­fy compensable factors and introduce marketconsiderations.

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74. Develop compensation strategies that inte­grate broad-'banding, target salaries, skill­and knowledge-based pay, variable pay pro­grams, and reward systems to support amove to flatter organization structures, allowgreater job-to-job mobility, and encourageemployee development.

75. Develop a classification system that organiz­es work within occupational families andbroad classifications, defining within eachfamily three levels of the career path: en­try/developmental, full performance, andsenior/expert.

Performance management.

76. Replace the present employee performanceappraisal process with a performance man­agement model built around customer needsand designed to improve organizational,work unit, and individual employee perfor­mance.

Training and development

77. Link training and development decisions toorganizational goals, objectives and perfor­mance, using performance-based budgeting,performancemanagement, and compensationto reinforce the link.

78. Refocus the state's centralized training func­tion on coordinating, facilitating and track­ing, rather than on delivering, training.

79. Establish mechanisms and interagency, inter­organizational relationships to maximizetraining resources and facilitate cooperationand the sharing of employee learning oppor­tunities.

80. Redefine career·development as employeedevelopment to emphasize professional

growth rather than promotion. Improve em­ployee access to training and developmentoptions and opportunities.

81. Respond to the following specific needs thatwere expressed by stakeholders:

• retraining

• managerial skills

• technology skills

• customer service skills

• knowledge of quality improvementprinciples and tools

• employee orientation

• training for changes resulting fromCORE

Creating consistency

82. Because the state is one employer, the threebranches of government should increaseequity and consistency in their human re­sources management practices by:

• Having one policy governing affirmativeaction, equal employment opportunity,and sexual harassment to ensure thateach branch is equally accountable forits actions.

• Mandating pay equity for all branches toensure that positions that are valuedequally by the employer receive equita­ble pay.

• Using a common job evaluation systemfor all three branches to allow the stateto monitor and compare employee com­pensation across all three branches.

• Adopting one classification system to

fucilitate employee deploYment andenable cross-branch comparison. Theclassification model recommended byCORE is broad enough to accommodatethe diverse needs of each branch whileallowing for statewide consistency andcompanson.

83. During the implementation of any recom­mendations for the executive branch, thechanges should be discussed with the othertwo branches to keep them informed and tofoster consistency where needed. Adoptionof a single human resources managementsystem is possible ifall branches see that thenew system is more flexible, is easilyadministered, and successfully meets theneeds of all users.

ConnectionS .

The human resources management recorrunen­dations share with the budgeting project theCOREPeifomumce accoWltability system modelthat replaces the existing inputfocused man­agement system with a system focused on cus­tomer needs and end results. This model createsa linkage benveen the wolkofindividual employ­ees and the outcomes ofa program or agency.

Rules

Reform imperatives

• The legislature has often delegated its policy-. making responsibilities to agencies to be car­ried out through rulemaking. Consequently,agencies may spend many months or yearsin rulemaking trying to resolve issues thatshould have been settled by elected officials.

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• Because of broad grants of authority givento agencies, administrative rules increasinglyset policy rather than implement legislativeinitiatives.

• The legislature has little oversight over agen­cy rulemaking. Strengthening its rulemakingoversight and amending some parts of theAdministrative Procedure Act would pro­vide, among other things, a better informedpublic that participates more in rulemaking.

• Governors could be, but have not been,involved in rulemaking. A strong oversightrole for the governor would increase execu­tive branch accountability for rulemaking.

Recommendations

Delegation of rulemakingauthority to agencies

84. The legislature should limit and focus futurelegislative delegations ofrulemaking powers.

The legislature should require agencies toprepare rule notes for bill provisions autho­rizing or requiring rules that may significant­ly affect the delivery of a service, or resultin significant burdens on agencies or others.

85. The legislature should review and limit pastdelegations of rulemaking powers.

The Legislative Commission to ReviewAdministrative Rules, with the cooperationof the Revisor of Statutes and House andSenate Research staff, should report to the1994 legislative session the frequency withwhich broad grants of authority are used toadopt rules and their use in defining policyand procedural direction.

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86. Legislative leaders should require seriousscrutiny of bills before delegating rulemak­ing authority.

87. The legislature, in establishing rulemakingmandates, should indicate what it expectswill be achieved, should direct the agency tospecify expected outcomes in the rule, andshould state a deadline for the agency tohave rules in place.

88. Where rules will have major cost impacts onlarge numbers ofaffected parties, the legisla­ture should require agencies to carry outstructured cost-benefit analyses.

89. The legislature should carefully examine thedesirability of giving small agencies rule­making powers if it does not fund them toperform all their functions, includingrulemaking.

Accountability for rules

90. The governor should have the opportunity toreview and comment on all rules just beforetheir adoption by commissioners.

91. The governor should be instrumental inseeking clarification ofdelegations ofauthor­ity from the legislature when policy directionis needed.

92. The legislature should limit rulemaking auth­ority to governor-appointed commissioners.

Oversight of rulemaking

93. The legislature should examine its currentmechanism for rules oversight and eitherstrengthen it or replace it with a new organi­zation.

94. The Legislative Commission to ReviewAdministrative Rules or a new joint gov­ernmental operations committee shouldannually evaluate the scope, volume andclarity of rulemaking authorizations.

95. The Legislative Commission to ReviewAdministrative Rules or a new joint gov­ernmental operations committee should coor­dinate activity to ensure that policy com­mittees have information about adopted rules- particularly those adopted following apublic hearing - and the provisions of thelegislation under which they were adopted.

The Administrative Procedure Act

96. An agency should be required to publish anotice summarizing questions to be consid­ered in the proposed rule, whether an agen­cy intends to form an advisory task force,and a list of persons or associations theagency intends to invite to serve on anadvisory task force.

97. The Administrative Procedure Act should beamended to require those who petition for apublic hearing to specify their objections andto include their names, addresses, and· tele­phone numbers.

98. The legislature should clarify criteria forstatements on the impact of rules affectingagricultura1land, small businesses, or localgovernments.

99. The legislature should provide the chiefadministrative law judge and the attorneygenernl with another process for incorporat­ing substantial changes introduced after theproposed rule is published.

100. In. their statement of need and reasonable­ness, agencies should be required to list thealternatives they considered·before decidingto propose a rule.

Initiatives by state agencies

101. Agencies should review existing rules andrepeal.those that are obsolete.

102. Agencies should seek exemptions from therulemaking process fur specific fee rules.

103. 'Rule interpretations or other educationaldocuments should be exempt from Admin­istrative Procedure Act rulemaking require­ments. -

104. Agencies should make better uSe of rulevariances or waivers to facilitate the use ofoutcome measures.

105. To better notify the general public ofrulemaking .activity, agencies should pr0­

vide more useful information about pro­. posed rules throughout the state.

106. Agencies should circulate proposed rulelanguage before it is published and askaffected parties to develop impact assess­ments based on this draft.

107. The Attorney General's Office· shouldsimplify the approval of rules adoptedwithout a hearing.

108. The State Registerpublishers should reducethe time it takes to proofread, edit, andprepare for publication each of the threerule notices required by the AdministrativeProcedure Act - the notice to solicit out­side opinion, the notice of intent to adopt arule, and the notice of adoption.

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109. Agencies should use neutral third parties insome highly controversial rules negotia­tions.

110. Agencies should organize their rulemakingresources for maximum benefit.

Connections

Administrative roles figure prominently in thedelivery of environmental and human services.Recommendations to reduce the prescriptivenessofroles as well as to eliminate U111lecessary rolesand encourage exceptions to better focus onoutcomes are reflected in the recommendationsfor the environmental and human services sys­terns. Creating outcome-based roles builds on theresults orientation ofthe budgeting andfinancialmanagement project.

Electronicdata interchange

Refonn imperatives

• Electronic data interchange is a provenmethod for re-engineering business process­es; it is already widely used in the privatesector for a number of infonnation exchang­es like purchasing and payment.

• EDI often results in substantial cost savingsover paper-based business systems.

• The state lags far behind its private-sectorbusiness partners in developing EDI sys­tems.

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Recommendations

111. An EDI system should be implemented forstatewide application before the StatewideSystems Project comes on line.

The Department ofAdministration's invest­ment initiative for contract purchasingwould be a good starting point for EDI,and would allow the state to gain experi­ence in dealing with the process, technolo­gy, and communications. In addition, thisapplication would :facilitate a true assess­ment of cost reductions and the means toachieve them.

112. The state should implement EDI through aPC-based system.

113. State government should expand its use ofED!.

Areas offering significant opportunity in­clude health care, vendor payments, andinformation exchange.

114. The state EDI Committee should be re­sponsible for coordinating the developmentof EDI technology in state government.

115. State government should be involved indeveloping EDI standards and p~tices.

Connections

Recommending ED] to redesign business pro­cesses at the state demonstrates afocus not onlyon efficiency, but also on responsiveness to thestate's clients. Thus, the ED]project echoes themajorfocus points ofthe other CORE projects.

Quality improvementinitiative

Reform imperatives

• The basic tenet of the quality improvementphilosophy is customer satisfaction, andCORE's vision defines customer- and client­driven service delivery as a top priority in itsreform proposals.

• A quality approach focuses on the continualimprovement of processes, and. CORErecognizes that processes must be analyzedand redesigned to make government opera­tions more efficient.

• A quality approach would precipitate a cul­tural change in government, which wouldhelp ensure that CORE's structural redesignsachieve success.

• .Building continuous quality improvementpractices into CORE's long-term systemicimprovement strategy could mitigate theneed for future reform efforts.

Recommendations

116. If the governor and legislature are com­mitted to providing quality services to thestate's citizens, they must support andreward innovation, partnerships, and risk­taking in the use of quality tools in stategovernment.

117. The development and implementation ofquality initiatives should be the responsibili­ty of each cabinet agency. New initiativesshould be developed with the input ofquality improvement experts and key exter-

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nal and internal government stakeholders,including: state managers, state employeebargaining units, interested legislators, theMinnesota Council for Quality, private­sector business executives, and the Minne­sota Quality Initiative.

118. Cabinet strategies should seek to accom­plish the following:

• Establish vehicles to obtain regular cus­tomer and client feedback on state ser­vice delivery.

• Provide access to training on qualityconcepts and practices for state employ­ees.

• Develop coalitions with key stakeholdersin the public-sector quality movement,especially state employee bargainingunits, the Minnesota Quality Initiative,the Minnesota Council for Quality, andprivate-sector business.

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• Match public or private OIganizationsthat are willing to serve as mentors orvolunteer consultants with state agenciesimplementing quality improvementprojects.

• Determine how to dedicate resources tocarry out agency quality initiatives.

Connections

A quality initiative encourages the developmentofa state government that is more reflective ofCORE's vision by creating afononfor agenciesto realize constant improvement in all of theirbusiness activities. As a result, improvements arelikely to be demonstrated in the efficiency andeffectiveness of the state agencies that haveparticiPated in quality improvementprojects. Thecultural change and systems improvements resul­ting.frOm a quality initiative are important to thesuccess ofall CORE recommendations.

T he Commission on Refonn and Efficien­cy believes that, despite Minnesota'sreputation for excellence in government,

citizens and taxpayers should not be satisfiedwith the status quo. CORE is proposing sweep­ing and innovative refonns that will transfonnstate government. If CORE's recommendationsare fully enacted:

• government will be better managed

• government will provide vastly improvedservices to citizens

L

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CONCLUSION

• government will deliver greater value totaxpayers by saving as much as $173 millionover the first five years of implementation.

CORE fully realizes that its recommendationswill be controversial and that many affectedgroups will fight to protect the status quo. How­ever, Minnesota's citizens and elected publicofficials have a historic opportunity to reachbeyond partisanship and narrow, special intereststo find the political will to champion real refonn.

THE COREMEMBERSHIP

AREND J. SANDBULTECOMMISSION CHAIRChairman, President and CEOMinnesota PowerDuluth

MARCIA F. APPELExecutive DirectorAssociation of Area

Business PublicationsLakeville

JANEBELAUPresidentBelau Consulting GroupRochester

SHARON SAYLES BELTONMinneapolis City Council

PresidentMinneapolis

JOHN E. BRANDLProfessorUniversity of MinnesotaMinneapolis

GARY DENAULTExecutive DirectorMiddle Management AssociationSt. Paul

JACK W. EUGSTERCEO, The Musicland GroupMinneapolis

GERALDINE A. EVANSChancellorCommunity College System­St. Paul

JEAN L. HARRISSenior Associate DirectorMedical AffairsU of M Hospital & ClinicMinneapolis

BECK HORTONPresidentJuno Enterprises, Inc.Minneapolis

ARLENE J. LESEWSKIRegional DirectorIndependentBusiness Association

of MinnesotaMarshall

ERNEST A. LINDSTROMAttorney at LawLindstrom Law OfficesMinneapolis

LEE LUEBBEFormer ChairWinona County Board

of CommissionersWinona

H. WILLIAM LURTONChairman and CEO)ostens, Inc.Minneapolis

DORRAINE (DORRIE) MUNDAssociate Attorney at LawHall, Byers, Hanson, Steil &

WeinbergerSt. Cloud

ROBIN PANLENERPresidentMinnesota Association of

Professional EmployeesSt. Paul

KATHERINE (KAT!) SASSEVILLEGeneral CounselOtter Tail Power Co.Fergus Falls

GLEN TAYLORChairman and CEOTaylor Corp.North Mankato

ERMA J. VIZENORPh.D. StudentHarvard UniversityPonsford

STEPHEN E. WATSONPresidentDayton-Hudson Corp.Minneapolis

CONNIE G. WEINMANVice PresidentNational City BankMinneapolis

C. ANGUS WURTELEChairman and CEOThe Valspar Corp.Minneapolis