The Make New York Work Plan (1) -- Restructuring State Government

8/8/2019 The Make New York Work Plan (1) -- Restructuring State Government

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RESTRUCTURING STATE GOVERNMENT

WWW.MIKEKAPLOWITZ.COM 1

KAPLOWITZ 2010 | RESTRUCTURING STATE GOVERNMENTA Comprehensive Plan to Reduce Government Spending and Maximize Efficiency

I. REDUCE STATE SPENDINGNew Yorkers can no longer afford to foot the bill for Albanys extravagant spending. For

too long, New Yorks budgets have put forth spending commitments that dramatically

outpace realistic revenue growth. Irresponsible debt practices and profligate spending,

coupled with significant job losses, have severely weakened our financial condition.

Since the year 2000, state spending has increased by over 80 percent, from $73.6 billion

in SFY 2000-01 to $133.8 billion in SFY 2010-11.1 Over the same period, state debt has

risen to over $52 billion. The State faces budget gaps of $30 billion over the next three

years, even after closing a budget gap of approximately $9 billion for the fiscal year

beginning April 1, 2010. At the same time, many localities face severe financial

difficulties that will significantly impede their ability to provide quality public services to

our citizens.

These considerable fiscal challenges will require the states leaders to find creative and

effective solutions to reestablish a stable financial footing. A comprehensive and

disciplined fiscal policy will help the state reverse patterns of unsustainable spending,

rising debt levels and structural budgetary imbalances. Drawing on his experience as a

financial planner, Mike Kaplowitz will work hard to implement a series of effective

budgetary controls that will finally impose a heavy dose of financial discipline.

1 Office of the State Comptroller: Comprehensive Annual Financial Report2010, available athttp://www.osc.state.ny.us/finance/index.htm
http://www.osc.state.ny.us/finance/index.htmhttp://www.osc.state.ny.us/finance/index.htmhttp://www.osc.state.ny.us/finance/index.htm


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Impose a State Spending Cap

A statutory and constitutional spending cap is absolutely necessary to limit the excessive

growth in state spending that has gone unchecked for decades. Limiting spending growth

in the State Operating Fund to the rate of inflation will impose budgetary discipline both

in times of economic prosperity and decline, and force state lawmakers to confine budget

priorities within reasonable expense limits. This is a simple, non-partisan and consistent

way to contain reckless spending.

Freeze Public Sector Hiring and Salary Increases

New York State has one of the largest and fastest growing public sector workforces in the

country, yet the manner in which public services are delivered is sorely lacking in

efficiency and cost-effectiveness. With over 164,000 full-time employees across over 50

state agencies, the state now spends more than $15 billion on salaries and non-personal

services costs. This represents a significant expense for the state and must be controlled.

Contracts for 96 percent of the State workforce must be renegotiated beginning April 1,

2011. As gubernatorial candidate Andrew Cuomo has suggested, we must freeze salary

increases for state workers for one year as part of a short-term financial austerity plan.

Cut Down of the Use of Outside Consultants

In SFY 2008-09, at a time when the state was facing severe fiscal constraints, spending

on outside consultants, including support staff, rose to $2.9 billion; a $100 million

increase from the prior fiscal year. That is the equivalent of 23,329 full time consultants

working for the state. Based on reports filed with the New York State Comptroller, the


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state pays outside consultants performing professional services an average of $160,719

each annually; 62 percent more than public employees doing similar work, including the

cost of their benefits. By some estimates, the state could save between $280 and $480

million annually by replacing about half of the states expensive private consultants with

employees already on the state payroll.2

As State Senator, Mike Kaplowitz would sponsor legislation directing the Division of

Budget to set consultant spending savings targets for each state agency. He would also

work to institute a freeze on new and renewed state agency consultant contracts over

$100,000 until a cost-benefit analysis is completed by the agency and a waiver is

approved by the DOB.

Reduce Pension Costs

According to estimates by the Office of the State Comptroller, the cost of public pensions

and health benefits for active and retired public employees will grow from $1.3 billion in

1998-99 to $6.2 billion in 2013-14almost a 500 percent increase. Next to public health

and education spending, pension benefits are one of the most significant cost-drivers in

the state budget. The recent pension reforms creating a Tier V for new employees was a

step in the right direction, but did not go nearly far enough. We must re-evaluate what

benefits the State provides and to whom, including increasing employee contributions.

We must also concentrate our efforts on fighting the abuses of the pension system that

have been uncovered, especially among employees near retirement who manipulate

2http://www.nyspef.org/fact_sheets/2010/reducestatespendingonconsultants.pdf
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overtime schedules to increase retirement benefits. A new Tier VI would crack down on

pension padding and overtime issues that drive up pension costs.

Fix Medicaid

The State of New York faces growing budget gaps in the next several years, and a chief

source of pressure on the State budget is the growth of Medicaid costs. In SFY 2009-10,

Medicaid spendingState, federal, and localtotaled over $50 billion, the equivalent of

more than one-third of the States All Funds budget. Between 2009-10 and 2013-14, this

total is expected to grow by 27 percent to $63.5 billion, an average annual increase of

nearly seven percent. Over the same period, the States share of Medicaid costs will

increase much fasterby 71 percent, an average annual increase of nearly 18 percent

because of the expiry of federal stimulus aid.3

In 2014, because of the recently enacted

federal health care reform law, increased numbers of New Yorkers are projected to enroll

in Medicaid, further increasing State costs. Worse, New York State spends 69 percent

more per beneficiary than the national average.4

The State cannot do an adequate job of managing the increasing number of enrollees and

their associated costs, let alone adjust to the changes contemplated by federal health care

reform, unless it changes the way in which Medicaid manages, delivers and pays for

health care. A fundamental restructuring would be driven by the following imperatives:

A) The State must do a much better job of controlling over-utilization of

Medicaid services. An important element of this is having the State take over

3 These figures do not reflect the recent extension of the temporary FMAP increase through June, 2011.4See Carol Kellerman, Citizens Budget Commission recommendations for the fiscal year 2009-10 budgetto State Legislators, (February 02, 2009).


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responsibility for administration of Medicaid from the counties. Once the

State capped the counties Medicaid costs, counties lost all incentive to

control costs in the program.

B) The State must change the process by which Medicaid sets rates of

reimbursement to health care providers in order to increase the programs

capacity to control costs and improve outcomes.

C) The State must also address cost pressures arising outside Medicaid through

reform of its medical malpractice system and a more aggressive push for

preventative care in underlying treatment areas such as substance abuse,

cardiovascular disease and childhood obesity.

D) Adequate funding for the Office of the Medicaid Inspector General (OMIG) is

critical for the State to effectively cut down on fraud, waste and abuse.

Improve the Efficiency of Education Spending

In addition to Medicaid, education spending is one of the fastest growing state expenses.

Since 2003-04, school aid has increased at more than twice the rate of inflation. 5 To

mitigate the unsustainable growth in education spending, the state must ensure that

school aid is targeted and fair, providing support to those school districts most in need.

Also, other subsidies (e.g. building aid, reimbursable aid) must be scrutinized so that

these policies do not create a perverse incentive for school districts to ignore efforts to

5See NYS Division of Budget, 2010-11 Executive Budget press release available athttp://www.budget.state.ny.us/pubs/press/2010/pressrelease10eBudget01.html.
http://www.budget.state.ny.us/pubs/press/2010/pressrelease10eBudget01.htmlhttp://www.budget.state.ny.us/pubs/press/2010/pressrelease10eBudget01.htmlhttp://www.budget.state.ny.us/pubs/press/2010/pressrelease10eBudget01.html


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control costs. Coordination between school districts can boost efficiency and save money

overall; a recent study from the State Comptrollers Office estimated that $145 to $365

million couldbe saved from the consolidation of school back office services.6

State policymakers must also focus on eliminating mandates on school districts that

dramatically increase the cost of providing a quality education. Mandate reform will

better position local districts to reduce costs, including personnel costs which account for

over 70 percent of school district expenses.7

School district personnel costs have been

growing at a rate of close to six percent annually. Reducing that growth by half would

enable school districts to save approximately $1 billion annually, while freezing

personnel costs would generate approximately $2 billion in savings from projected

growth rates.8

Establish a Statewide Care Coordination Planfor New Yorks Mentally Ill

Care Coordination is a method of strengthening the support networks for New Yorks

mentally ill population. While various baseline support programs are available to adults

suffering from mental illnesses, support networks that focus on long term care and patient

stability are inadequate, which can often result in repeated hospitalizations,

incarcerations, homelessness and potential injury to oneself or others. These negative

6NYS Comptrollers Office, 2010 Annual Report on Local Governments, available athttp://www.osc.state.ny.us/localgov/datanstat/annreport/10annreport.pdf.7 New York State Commission on Property Tax Relief, Final Report, (December 1, 2008) pg. 34, availableathttp://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdf.8 This is based on the following calculation: Estimates of growth rates from 06-07 and 07-08 from the NYSCommission on Property Tax Reliefs Final Report (pg. 35); Total school spending is assumed to be about$50 billion. Three percent multiplied by 0.7 (for the percent of spending accounted for by personnel costs)produces savings of $1.05 billion on a $50 billion base spending level.
http://www.osc.state.ny.us/localgov/datanstat/annreport/10annreport.pdfhttp://www.osc.state.ny.us/localgov/datanstat/annreport/10annreport.pdfhttp://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdfhttp://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdfhttp://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdfhttp://www.cptr.state.ny.us/reports/CPTRFinalReport_20081201.pdfhttp://www.osc.state.ny.us/localgov/datanstat/annreport/10annreport.pdf


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consequences are not only detrimental to a patients overall health, but are a serious drain

on the states limited resources.

By assigning care coordinators to enrolled members, New Yorks mentally ill will have

the support and assistance of trained professionals who will, among other things:

A) Develop Individualized Service Plans (ISPs) to identify existing state services,

support programs and providers that will help patients in recovery, enhancing

wellness and satisfaction (the ISP is web-based and shared across state-

supported service programs to boost efficiency);

B) Use best efforts to provide or arrange for desired services and support

programs;

C) Ensure that services are being provided as identified by the ISP; and

D) Support the ISP as the single plan for service delivery.

As a Westchester County Legislator, Mike Kaplowitz spearheaded the effort to establish

Westchesters first Care Coordination program under the countys Department of

Community Mental Health.9

Within its first year, the program significantly reduced

patient stays in State hospitals, days incarcerated, emergency room visits and rates of

homelessness. The reduced strain on secondary government services resulted in a fiscal

9http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450.
http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450http://mentalhealth.westchestergov.com/index.php?option=com_content&task=view&id=808&Itemid=1450


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savings of over $1 million in Westchester County, from only 48 enrollees in the first year

of the program.

As State Senator, Mike Kaplowitz would work collaboratively with officials from the

New York State Department of Mental Health to implement a statewide Care

Coordination plan for the more than 500,000 New Yorkers who are served by New

Yorks mental healthcare system each year. By expanding Westchesters successful

model statewide, projected savings could exceed $20,000,00010

, and the long term health

and wellness of our mentally ill population would be dramatically improved.

II. RESTRUCTURING STATE GOVERNMENT TO MAXIMIZE EFFICIENCY

New Yorks State and local governments have become too big, too expensive, and too

ineffective. There are countless State agencies, boards, commissions, departments,

councils, divisions, offices, task forces and public authorities that collectively make up a

slow, antiquated, bureaucratic state government apparatus that continuously struggles to

meet the needs of our citizens with efficiency. New Yorks overlapping system of local

government today consists of more than 10,500 governmental entities, while the

proliferation of special taxing jurisdictions and other specialized administrative entities

has needlessly disjointed service delivery at the local level. This oversized and

inefficient bureaucracy is not only duplicative and inefficient, but also extraordinarily

expensive.

10This rough calculation aggregates Westchester Countys savings figures as a result of the CareCoordination program ($1.1 million) as a function of the countys share of New York States overallpopulation (4.86%). $1.1 million/0.0486 = $22,633,745.


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Mike Kaplowitz will make it a priority to restructure and rightsize the existing

bureaucratic mess by:

A) Targeting structural waste and inefficiency in state government;

B) Reducing and consolidating the number of local governments and special taxing

jurisdictions throughout the state;

C) Consolidating New Yorks various economic development agencies;

D) Holding Industrial Development Agencies accountable; and

E) Continuing the effort to rein in New Yorks public authorities.

Reducing Structural Waste and Inefficiency

With the proliferation of state agencies, government is no longer operating as a single,

integrated unit working collaboratively and efficiently to accomplish the various public

policy goals of the State. Agencies have their own modes of organization and

procedures, their own bureaucracy and their own constituencies who are extremely

reluctant to change. Consider, for example, the Department of Health. In just this one

single agency, the Legislature has inserted at least 87 statutorily created administrative

units, including 46 councils, 17 boards, 6 institutes, 6 committees, 5 facilities, 2 task

forces, 2 advisory panels and a working group. In total, the Executive Department now

consists of at least 75 administrative units, almost all frozen in statute.11

11 Cuomo 2010, The New NY Agenda: A Plan for Action; pg. 66.


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As State Senator, Mike Kaplowitz will carefully assess the performance and effectiveness

of every state entity and work to streamline their functions through the consolidation and

leveraging of shared resources. Eliminating this inefficiency and waste will save

taxpayers hundreds of millions of dollars.

Local Government Consolidation

Government at the local level in New York is rife with excessive redundancies,

duplicative service delivery and overlapping responsibilities. Currently, there are more

than 10,500 local governmental entitiesincluding 62 counties, 932 towns, 555 villages

and more than 7,000 special districts all of which are imposing taxes and fees on

struggling New York individuals and families.12

Despite the important public services

provided by many of these local government entities, as a recent report from the

Comptrollers Office explained, [o]ur municipal structure is not only highly complex,

[but] it no longer provides a rational differentiation based on population densities and

settlement patterns, as it did when the classifications were originally made. 13 Moreover,

New Yorks ballooning local government structure is responsible for much of the high

local tax burden that New Yorkers have been shouldering for too long.

The Government Reorganization and Citizen Empowerment Act, authored by Attorney

General Andrew Cuomo, was a critical first step in the states effort to eliminate legal

12 There is no definitive study on how many local governments New York actually has. The Department ofState, the Office of the State Comptroller and most recently, the New York State Commission on LocalGovernment Efficiency and Competitiveness (known as the Lundine Commission) have arrived atdifferent numbers. A survey by the New York State Attorney Generals Office found 10,521 total localgovernments. A breakdown of that number can be found athttp://www.ag.ny.gov/bureaus/legislative/governmentconsolidation/govs.html.13 Office of the New York State Comptroller, Outdated Municipal Structures, available athttp://www.osc.state.ny.us/localgov/pubs/research/munistructures.pdf.
http://www.ag.ny.gov/bureaus/legislative/governmentconsolidation/govs.htmlhttp://www.ag.ny.gov/bureaus/legislative/governmentconsolidation/govs.htmlhttp://www.osc.state.ny.us/localgov/pubs/research/munistructures.pdfhttp://www.osc.state.ny.us/localgov/pubs/research/munistructures.pdfhttp://www.osc.state.ny.us/localgov/pubs/research/munistructures.pdfhttp://www.ag.ny.gov/bureaus/legislative/governmentconsolidation/govs.html


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barriers to government mergers and empower citizens to reorganize their local

governments by dissolving or merging the many taxing layers that have contributed to

New Yorks high local tax burden (the highest in the country). To ensure that local

governments and citizens maximize the potential for efficiency and consolidation offered

by this act, Mike Kaplowitz will work to provide adequate financial incentives and

reorganizational expertise to all local governments. Additionally, he will continue efforts

to eliminate remaining legal barriers to the integration and merger of municipal services.

Consolidation of Economic Development Agencies

Currently, economic development efforts are balkanized across as many as 28 separate

agencies14

and hundreds of public entities with economic development missions,

including over 600 local development corporations, 115 local industrial development

agencies, 72 local Empire Zone boards, 50 business improvement districts, 49 urban

renewal agencies and community development agencies and 10 regional planning

councils.15

This bloated economic development apparatus results in overlap, duplication and waste,

and acts as an entrenched impediment to giving the public the best service at the lowest

cost. Mike Kaplowitz, in working to better position New York State to lead our

economic recovery, will support legislation that consolidates the efforts and

14 See A.T. Kearney,Delivering on the Promise of New York State: A Strategy for Growth & Revitalization12 (2007)report prepared for Empire State Development, available athttp://www.nycp.org/publications/2007 0717 ATKearney report.pdf.15 Cuomo 2010, The New NY Agenda: A Plan for Action; pg. 97.
http://www.nycp.org/publications/2007%200717%20ATKearney%20report.pdfhttp://www.nycp.org/publications/2007%200717%20ATKearney%20report.pdfhttp://www.nycp.org/publications/2007%200717%20ATKearney%20report.pdf


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responsibilities of these disparate economic development entities under the auspices of a

single State Office of Economic Development.

Restore Accountability of Industrial Development Agencies (IDAs)

A pattern of poor performance and unfulfilled job creation promises by Industrial

Development Agencies (IDAs) and qualifying IDA-partner developers has

become clear, suggesting that broad-based reforms are urgently necessary to

ensure that IDA subsidies fulfill their mission of creating jobs and stimulating

economic growth. Between the 116 IDAs currently operating in New York State,

nearly $400 million in annual tax exemptions are offered in support of local

economic development initiatives. But an analysis of the most recent data

reported by IDAs to the NYS Comptrollers Office indicates that New Yorkers

are not getting their moneys worth.

IDAs provided $385 million in tax exemptions in 2005 which resulted in a net

loss of $266 million in property taxes to local governments, including $136

million in lost revenue to school boards.16

Subsidized projects only managed to

deliver 36% of the total number of jobs promised, and almost 70% of IDAs

statewide subsidized companies that actually cut jobs.17

Because these benefits implicate the power of the State and come at the expense

of the State and local coffers, it is important to carefully monitor and control IDA

16New York Office of the State Comptroller. IDAs Project Approval, Evaluation, and MonitoringEfforts. (2006)17 Ibid, pg. 5.


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operations to ensure that IDA-supported projects deliver the benefits that their

proponents promise. At a time when local municipalities and school districts are

shouldering the burden of increasing costs associated with Medicaid, pension

obligations, schooling and an eroding tax base, it is crucial that taxpayers hold

IDAs and the projects they support accountable. Specific reforms that Mike

Kaplowitz will work to implement include:

A) Improved Standards for determining who receives IDA assistance. Current

law does not require IDAs to set basic standards for the projects that are

subsidized and the jobs that are created. Mike Kaplowitz will ensure that

IDAs limit their subsidies to projects that provide quality jobs and fair wages

that will sustain New York families, build our local economies, and make a

positive impact on our communities and our environment.

B) Greater Transparency in the decision-making and reporting processes of

IDAs to provide the communities that are affected with the necessary

information to advocate for their needs, or raise concerns about negative

impacts. Stronger reporting requirements for subsidy recipients will also make

it easier for communities to keep track of a developers activities and evaluate

their performance.

C) Stronger Accountability measures that will hold businesses accountable for

their poor performance in meeting job creation and economic development

goals. By working to institute clawback procedures, localities will be


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authorized to cancel, reduce or recover a subsidy when the recipient fails to

deliver the promised benefits or violates its contractual obligations.

Public Authorities Reform

New Yorks public authorities were originally created in 1921 to circumvent the

Constitutional requirement of voter approval of State debt.18

After decades of

exponential growth, the State now has several hundred public authorities created either

by statute or as subsidiaries of other authorities.19

Public authorities perform a multitude

of services previously provided through State agencies or local governments, including

economic development, transportation infrastructure development and housing.

Sadly, like the increasingly complex web of state agencies, public authorities have

proliferated to an extent that has compromised their effectiveness. Moreover, authorities

are responsible for approximately 93 percent of the States indebtedness (over $48 billion

as of 2009).20 The bloated size and inefficiency of public authorities, as well as their

steep price tag, demand reform.

As State Senator, Mike Kaplowitz will work to enhance existing reform efforts to

increase transparency, strengthen accountability measures, and improve debt

management. Created pursuant to the Public Authorities Reform Act of 2009, the

independent Authorities Budget Office (ABO) has collected, analyzed and disseminated

18 See N.Y. Const. Art. 7, Sec. 11 (prohibiting the State from contracting a debt unless the debt shall beauthorized for some single work or purpose by the people at a general election).19 Lynn Wilson and Clayton Eichelberger,New York State Public Authority Reform: Where We Have ComeFrom and Where We Need to Go, 11 N.Y.S.B.A. Govt, Law and Policy Journal. 15-16 (2009).20 See Scott Fein,Introduction: Public Authority Reform, 11 N.Y.S.B.A. Govt, Law and Policy Journal;pg. 5 (2009).


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to the public a plethora of information on the finances and operations of state and local

public authorities. With this influx of new information, the Legislature is better

positioned to exercise its oversight and enforcement powers under state law to institute

best management practices, streamline operations, boost efficiency, and ensure that New

Yorkers are getting their moneys worth.

Specific reforms include:

A) Statutory limit on the creation of subsidiaries within existing state or local public

authorities. Certain provisions of the 2009 Public Authorities Reform Act

addressed the excessive creation of subsidiaries, but stronger provisions are

necessary to ensure that any newly-created subsidiaries are absolutely necessary,

and that their anticipated purpose does not fall under the scope of the operational

responsibilities of another authority or existing state agency.

B) Lower the monetary threshold of authority contracts that must be approved by the

State Comptroller from $1 million to $500,000.

C) Institute an annual debt ceiling for public authorities. New state authority debt

issued in 2009 alone amounted to over $17.7 billion. The state can no longer be

expected to meet the unsustainably high service payments on this debt.

III. BUDGET REFORMS

New York State is in dire need of a comprehensive reform plan to fix the States broken

budget process and give New Yorkers a fiscally responsible state spending plan. For


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decades, Albany has ignored the need for wholesale changes to the budget process,

instead opting for quick fix gimmicks on the back of misguided assumptions. As State

Senator, Mike Kaplowitz will work to implement wholesale changes to the budget

process, helping to establish a long-term, sustainable financial planning model, stricter

accounting principles, and stringent standards of accountability for State-financed

programs and services through the use of performance-based budgeting (a budgeting

concept that links funding decisions to program results).

GAAP Budgeting

It is time for New York to shed its reliance on fiscal gimmickry and manipulation by

requiring both the Executive Budget and the Enacted Budget to be balanced according to

Generally Accepted Accounting Principles (instead of the current cash-basis accounting

method), which will fundamentally realign recurring spending with recurring revenue to

restore fiscal stability. Mike Kaplowitz will also insist on reforms that will mandate that

all state operating funds be balanced each fiscal year, not merely the General fund.

Mandate an Annual Tax Expenditure Report

This would require the Executive to submit to the Legislature an Annual Tax

Expenditure Report that would list a cost-benefit analysis of all of New Yorks 380-plus

tax break programs, so that we may focus our efforts on strengthening the programs that

work, and ending the programs which waste hundreds of millions of dollars in revenue.


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Performance-Based Budgeting

In February 2009, the Pew Center on the States issued a report on effective performance-

driven and data-based budgeting methods. According to the Pew Center, states that are

successful in such endeavors are those that combine short-term strategies to balance

their budgets with long-term fiscal and management investments to serve vital public

needs and position themselves for the future.21 In the same report, the Pew Center

singled out New York as a state whose inability to budget for performance is a weakness.

While some New York State agencies report program performance information in their

strategic plans, performance information does not appear to be well integrated in the

decision-making process [of the budget].22

For example, New York currently does not:

Define clear, statewide outcome goals as part of a long-term strategic framework;

Have a uniform system of soliciting performance information from agencies or

programs;

Give instructions on how to assemble such information; or

Include performance information or connect funding determinations to

performance measures or targets in either the Governors proposed budget or the

legislatures appropriations bills.

21 The Pew Center on the States, Trade-Off Time: How Four States Continue to Deliver, Feb. 2009.22 The Pew Center on the States, Government Performance Project: New York, 2008.


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New Yorks budget process is best described as incremental budgeting. In other

words, an agencys budget is primarily based on the amount it was allocated the previous

year, although broad economic or political changes (such as recessions or changes in

administration) can result in an agency requesting and/or receiving more or less than they

did the year before. Incremental budgeting has its advantages; it is a very stable process

with few, if any, great changes in funding from year to year. However, it often

encourages wasteful or unnecessary spending to maintain or increase allocations in future

budgets, and creates no incentives to reduce costs. Over time, budget allocations can

disconnect from statewide priorities, leading to ineffective or relatively low priority

legacy programs getting more money than newer, more effective programs.

New York can meet the standard of smart, effective, and transparent budgeting that has

been set by the best practices of other states by re-evaluating the way it budgets. New

York should consider adopting budgeting methods that:

A) Build a long-term strategic framework for the state, with clearly defined outcome goals;

B) Refocus agency missions and performance measures to chart progress toward those

goals;

C) Use the information gathered to better inform the budget process, improve state program

performance, and engage the public.

In short, New York should consider adopting a system of performance-based budgeting.


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Who Uses Performance-Based Budgeting?

The federal government adopted the Government Performance and Results Act (GPRA)

in 1993, a form of performance-budgeting which required all federal agencies to develop

five-year strategic plans setting out long-term goals and objectives and to submit annual

performance reports with their budget requests. A review of the GPRA by the General

Accounting Office (GAO) found that the act established a solid foundation of results-

oriented performance planning, measurement, and reporting in the federal government.23

A 2010 report by the Center for American Progress notes, however, that in practice [the

GPRA] has led more to the preparation of reams of paper than clarity on the outcomes

agencies are trying to achieve.24

President Obama has recognized these deficiencies and

is addressing them by asking his agencies to work towards and report on a targeted set of

high-priority objectives, rather than just producing a litany of agency activities.

Virtually every state has adopted a requirement for some form of measuring agency or

program results, a crucial first step in implementing a system of performance-budgeting.

New York is not one of them. Most states have requirements for measuring performance

that do not tie the measurements to statewide goals or use the information for smarter

budgeting. However, there are a handful of states that lead the way in performance-

budgeting best practices. Virginia has an acclaimed system of legislating for results that

includes a bipartisan and multi-branch approach to setting statewide goals and

publicizing progress towards those goals.

23 U.S. GAO, GPRA Has Established a Solid Foundation for Achieving Greater Results, Mar. 2004.24 Center for American Progress, Golden Goals for Government Performance, Feb. 2010.


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As State Senator, Mike Kaplowitz will make the design and implementation of a

comprehensive performance-based budgeting process a top priority. With a state budget

exceeding $133 billion, it is imperative that each budget allocation is thoroughly

evaluated and measured against the outcomes of that spending.

Documents

The Make New York Work Plan (1) -- Restructuring State Government