Iowa’s experiment of designating six state agencies with special charter status apparently did not make major inroads into reinventing government, according to a report from State Auditor David Vaudt.
Although the six state agencies that functioned under the charter agency initiative from July 2003 through June 2008 reported cost savings and revenue increases for three of the covered years, Vaudt concluded they did not meet the $15 million yearly target and the overall initiative fell short of achieving the program’s stated goals.
“It was not implemented as it was sold,” Warren Jenkins, deputy state auditor, said of the program that was not extended beyond fiscal 2008. “It certainly did not accomplish what its stated goal was. Based upon what we found, we agree it should not have been extended.”
The so-called “halo” agencies that functioned under special charter status that granted them certain benefits and rule flexibilities included the Alcoholic Beverages Division of the state Department of Commerce, the state Department of Corrections, the state Department of Human Services, the state Department of Natural Resources, the state Department of Revenue, and the Iowa Veterans Home.
Among the findings in the state auditor’s 97-page report, only three of the participating agencies reported revenue increases and one of those agencies accounted for 88 percent of the total amount reported. Also, revenue increases that were reported resulted from daily operations and were not a direct outcome of the initiative, the audit found. “Of the cost savings reported, only 25 percent were actual cost reductions while the remainder was appropriation reductions — of which 35 percent was returned to the charter agencies as grant funds.
“They didn’t run the program like it was intended. They counted savings from the Lottery which was not a charter agency and basically they did not accomplish what they intended to,” Jenkins said. “The savings were supposed to result from the reinvention process. They made no effort, it appears, to determine where the savings came from or where the additional revenue came from. The vast majority of the things that were accomplished did not need charter agency status. They could have happened irrespective of charter agency status.”
The initiative was implemented as a measurable way to reinvent state government operations in order to provide improved services more efficiently and effectively. The special charter designation established certain benefits and flexibility that included the ability to waive administrative rules, the ability to award employee bonuses, and an exemption from obtaining Executive Council approval for out-of-state travel.
In his report, Vaudt recommended several improvements to the administration of the initiative should a similar performance-based program be considered in the future. Included were steps designed to ensure that performance goals that were established would have measurable cost savings and/or revenue components, to ensure that only those performance goals resulting directly from the program were part of any required reports, and to ensure that sufficient supporting documentation was maintained for any cost savings and/or additional revenue that was reported.