Implementation is the development of procedures and activities to carry out policies enacted by the legislative body. It may involve creating new agencies or bureaus or assigning new responsibilities to old agencies. It often requires bureaucracies to translate laws into operational rules and regulations and usually to allocate resources—money, personnel, offices, supplies—to the new function. All of these tasks involve decisions by bureaucrats—decisions that drive how the law will actually affect society.

Regulation is the development of formal rules for implementing legislation. State agencies charged with the task of regulating various activities—for example, environmental protection, business and professional codes, banking and insurance regulations, consumer affairs, and public utilities—must develop and publish specific (and sometimes lengthy) sets of rules. Most states require that proposed new regulations be published in advance of any action, that hearings be held to allow individuals and groups to comment on the proposed new regulations, and that new regulations be formally published prior to implementation. This process is designed to allow all interested parties the chance to help shape the actual rules that set policy.

Adjudication is bureaucratic decision making about individual cases. While regulation resembles the legislative process, adjudication resembles the judicial process. In adjudication, bureaucrats must decide whether an individual or firm is failing to comply with laws or regulations and, if so, what penalties or corrective actions are to be applied. Bureaucrats can decide to hold individuals strictly accountable to rules, to impose heavy penalties, or to mandate expensive corrective actions. Alternatively, they can interpret the rules loosely and allow individuals or firms that violate rules to get off lightly.

Bureaucrats almost always have some discretion in performing even the most routine tasks. Discretion is greatest in cases that do not exactly fit established rules, or when more than one rule might be applied to the same case, resulting in different outcomes. Bureaucrats may be courteous, helpful, and accommodating to citizens; or alternatively, impersonal, unhelpful, and even downright frustrating. Increasingly governments are conducting citizen surveys to determine how well citizens believe employees of a particular agency treat them.

Bureaucrats generally believe strongly in the value of their programs and the importance of their tasks. But beyond these public-spirited motives, bureaucrats, like everyone else, seek added power and prestige for themselves. These public and private motives converge to inspire them to seek to expand their authority, functions, and budgets. (Rarely do bureaucrats request a reduction in their authority, the elimination of the program under their direction, or a decrease in their agency’s budget.) Rather, over time, bureaucrats help to expand governmental functions and increase governmental spending, although the process slows during recessions.

The executive branches of virtually all state governments in the United States are fragmented, complex, and unwieldy. These organizational problems arise, first of all, as a result of the separate election of many statewide officials—for example, attorney general, secretary of state, treasurer, comptroller, superintendent of education, and others (see Table 7–2 in Chapter 7). There are nearly 300 separately elected executive branch officials in all the states. Only four states—Maine, New Hampshire, New Jersey, and Tennessee—have a single statewide elected executive, the governor, who heads the executive branch of government.

Organizational problems also arise as a result of the extensive use of boards and commissions throughout the states to head executive departments. Appointments to these boards and commissions are often for long terms and members cannot be removed except for “cause”—proven misconduct in office. The proliferation of separately elected executive officers in the states as well as independent boards and commissions creates messy organizational charts for state governments. To see this clearly, contrast the organizational chart for Mississippi’s executive branch—which is composed of the governor heading 12 departments, 9 separately elected executive officials, and 16 independent agencies and institutions—with that of Michigan whose governor is shown at the top of the chain of command for 19 departments (including the State Department headed by a separately elected secretary of state and the Attorney General Department headed by a separately elected attorney general). There are no separate independent boards or commissions on the chart. (See Figure 8-1, Mississippi, and Figure 8-2, Michigan.)

Organizational disarray, particularly the lack of clear lines of authority, makes it far more difficult to coordinate responses to disasters, hold the right officials accountable when things go wrong or don’t happen at all, or react to changing technologies that have the potential to harm the public. Nothing better demonstrates the technological challenges facing today’s public administrators than the growing threat of cybersecurity breaches. While public employees may be linked via networks, they may be denied access to critically important information generated by other departments on the grounds that it is “classified.” The situation raises up the age-old debate about how to make government operations

and information transparent while protecting individual privacy rights. The issue garnered a lot of attention when personal and financial data, including Social Security numbers, were posted on the Internet for First Lady Michelle Obama, Vice President Joe Biden, former secretary of state Hillary Clinton, and Los Angeles Police chief Charlie Beck. Another issue that has surfaced is how governments and private industry should share information about cybersecurity threats, particularly to critical infrastructure like dams, water systems, and power plants.

Modern public administration generally recommends a stronger governor and a more centralized state executive branch. Reform and reorganization proposals usually recommend (1) the elimination of many separately elected state executive officials and limiting the statewide ballot to governor, lieutenant governor, and attorney general; (2) eliminating boards and commissions as heads of agencies, and their replacement by single, removable gubernatorial appointees; and (3) consolidating many state agencies into larger departments, and making these agency and department heads report directly to the governor. While states have been slow to adopt these reforms, there has been some movement in this direction, but only marginally, as noted in Chapter 7 . Reorganization, especially agency consolidation, is also often touted as a cost-saving mechanism. But the evidence is mixed as to whether it really saves money or not.

Bureaucracies are frequently measured by how much money they spend and how many people they employ. As we would expect, states with larger populations spend more money and employ more people than states with smaller populations. Perhaps “bureaucratization” might be better measured by state and local spending per capita and the percent of a state’s workers that are employed by state and local governments. These measures control for population size and tell us how large a part state and local government spending and employment play relative to the population of each state (see “Rankings of the States: Government Spending and Employment”).

Populous states require big bureaucracies. It is no surprise that California, New York, Texas, and Florida, the nation’s four largest states in population, employ more people and spend more money than other states. However, when population size is controlled, it turns out that the largest states are not necessarily the biggest spenders. In per capita (per person) spending, New York ranks 3rd, California ranks 5th, while Texas is 35th, and Florida 36th.

Nor are these states necessarily the most “bureaucratized” in government employment in relation to their populations (percent of adult population employed by government). Using this measure, Alaska, Hawaii, and West Virginia rank as the most bureaucratized states in state and local government employees combined, while New York ranks 5th, California 32nd, Florida 35th, and Texas 45th. State and local government employment was hit harder than federal government employment by the recession.

Historically, government employment in states, counties, and cities was allocated by the patronage system. Jobs were handed out on the basis of party loyalty, electoral support, political influence, personal friendships, family ties, and financial contributions, rather than on the basis of job-related qualifications.

Although widely condemned by reformers, the traditional patronage system helped to strengthen political parties. It helped organize voters and motivated them to go to the polls. It maintained discipline within a party’s ranks. Patronage was a central component of political “machines” and a source of power for political “bosses” (see “Old-Style Machine Politics” in Chapter 11).

Patronage was also a major source of power for state governors. As late as the 1960s, almost half of all state jobs were filled by the governor or the governor’s patronage advisors from the ranks of “deserving” party workers. Patronage was especially widespread in the older, two-party states of the East and Midwest.

The merit system—government employment based on competence, neutrality, and protection from partisanship—was introduced at the federal level in the Pendleton Act of 1883.

This act created the federal Civil Service Commission (now called the Office of Personnel Management) for selecting government personnel based on merit. That same year New York became the first state to enact a merit system. Yet for many years only a few states adopted merit systems, and even in those states only a small proportion of government employees came under civil service protection.

But over time the merit system came to replace patronage as the principal means of staffing state and local government. In 1939, Congress amended the Social Security Act of 1935 to require states to set up merit systems in welfare and unemployment compensation agencies that received federal grants-in-aid. Gradually the states expanded their merit systems to encompass most of their employees. Reform governors capitalized on the public’s image of patronage as corrupt, and the federal courts began to strike at patronage systems with decisions preventing governments from firing their employees for partisan political reasons.³

Bureaucracies often develop their own “cultures,” usually in strong support of the function they serve, their client interest group, and of course, their own pay, perks, and job security. Government agencies become dominated by people who have worked there for most of their lives. They believe that their work is important, and they resist efforts by governors, legislators, mayors, and council members to reduce the authority, size, or budget of their agency. Change comes hard. Even when organizational charts are redrawn, new management philosophies are put in place, and new leaders get installed at the top, changing the bureaucratic culture will not be automatic. Success is often dependent on the degree to which persons at the lower levels of the organization are involved and can see potential personal benefits from shaking up business as usual.

Another troublesome problem in federal, state, and local bureaucracies is that of ensuring productivity—producing desired results at the least possible cost to taxpayers. Government executives often find it difficult to improve productivity because of the obstacles to rewarding or punishing public employees. Seldom can good performance be rewarded with raises or bonuses as in private employment. And, at the same time, poor performance often goes unpunished. Firing a public employee is difficult (see “Up Close: Firing a Public Employee”).

Democratic governments generally seek to ensure a representative bureaucracy. This means the recruitment and employment of a workforce that closely reflects the social composition of the population being served. It is believed that a representative workforce will reflect the values and interests of the people it serves and will be responsive to their problems and concerns. Moreover, a representative workforce provides symbolic evidence of a government “of the people, by the people, and for the people.”

Protection against discrimination based on race, gender, age, disability, and other factors unrelated to job performance is embodied in the Civil Rights Act of 1964, the Age Discrimination Act of 1973, and the Americans with Disabilities Act of 1990, as well as the Fourteenth Amendment to the U.S. Constitution. But how can state and local governments go about ensuring representativeness of their workforces without compromising the merit principle? Should state and local governments extend preferential treatment to minority job applicants in order to achieve a representative workforce?

Affirmative action programs were initially developed in the federal government. Affirmative action programs seek to achieve minority and gender representativeness in the workforce through preferential hiring and promotion tactics designed to redress perceived imbalances. Virtually all state and local governments in the United States today have affirmative action programs.

The constitutional question posed by affirmative action programs is whether they discriminate against nonminorities in violation of the Equal Protection Clause of the Fourteenth Amendment. (We explore this topic in more detail in Chapter 15, “Politics and Civil Rights.”) The Supreme Court has generally approved of affirmative action programs when there is evidence of past discriminatory employment practices. However, the Court has also held that race-based actions by government—any differences in treatment of the races by public agencies—must be found necessary to remedy past proven discrimination, or to further clearly identified, compelling, and legitimate government objectives. Moreover, race-based actions must be “narrowly tailored” so as not to adversely affect the rights of nonminority individuals.

Many state and local governments have affirmative action plans that go beyond federal equal opportunity requirements, which help explain why women and minorities comprise a larger share of public than private sector employees. Women make up nearly 60 percent of state and local government employees compared to 47 percent of private sector workers. African Americans also make up a larger share of state and local government employees (13%) compared to 10 percent in the private sector. The pattern is similar among Hispanics: 16 percent of state and local public sector employees, 11 percent of private sector employees.⁴ Today, African Americans and Hispanics are fairly well represented nationwide among firefighters, police officers, correctional guards, and technicians, and among support, service, and maintenance jobs.

Women and minorities are still underrepresented among top-ranked policymaking administrators at the state level (heads of departments, agencies, boards, commissions, and authorities; top staff advisors with policy-influencing responsibility in governors’ offices).⁵ African American women have made the greatest strides in gaining these top policy positions. Nevertheless, women and minority employment at all levels of state and local government exceeds that in the private sector workforce.

Most state laws today recognize the right of public employees to organize unions and bargain collectively with state and local governments over wages, hours, and conditions of work. Only a handful of states continue to resist collective bargaining with public employees. (State Right-to-Work laws allow unions, but do not allow dues to be mandatory for employees of unionized workplaces, see Figure 8-3.) However, in the early 2010s, a number of other states sought to restrict collective bargaining to help balance their strained budgets. Public employees everywhere have a constitutional right to join a union, but governments are not required by federal laws or the U.S. Constitution to bargain with them.

In contrast to private employees, public employees are generally prohibited by law from striking. Instead, most state laws stipulate that public employee labor disputes are to go to arbitration—that is, be submitted to neutral third parties for decision. Decisions of arbitrators (or arbitration boards consisting of equal representation from employees and employers, together with neutral members) may or may not be binding on both the city and union, depending on specific provisions of each state’s laws. However, many public employee unions throughout the country have rendered “no-strike” laws practically useless in a heated labor dispute. Police, firefighters, teachers, sanitation workers, and others have struck in many large cities, and there have been statewide strikes as well. Unions can nullify no-strike laws by simply adding another demand—no legal prosecution of strikers or union leaders—as a condition of going back to work, although the public is far less sympathetic to these workers’ demands during recessions.

State and local employees, who for generations were paid wages below those for comparable jobs in private enterprise, now match or even exceed private employees in salaries, benefits, pensions, and so on for many government jobs. Unions in the private sector of the American economy have been in steep decline in recent decades; today only about 7 percent of the private workforce is unionized. But unions in the public sector have grown dramatically, although lately they, too, have experienced a slight decline in membership. However, the unionization rate of public sector workers (36%) is still considerably higher than that of private sector workers. Most of AFSCME’s membership is concentrated in ten states—New York, Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Massachusetts, Minnesota, Connecticut, and Hawaii.

Public sector unions, notably AFSCME and state chapters of the National Education Association (NEA) and the American Federation of Teachers (AFT), are regularly ranked among the most effective lobbying groups in state capitals. And public employee union PACs regularly rank among the largest campaign contributors in state gubernatorial and legislative elections; the vast majority of their donations go to Democratic candidates.

Public employees and their families turn out on Election Day far more frequently than the average voter.

The vast majority of public service employees trust labor unions more than the governments they work for to provide good wages and benefits (72%), provide accurate information about workplace issues (72%), provide safe working conditions (65%), and provide steady employment (61%). But 67 percent say they trust government, not unions, to increase employee productivity, and 44 percent believe that unions tend to oppose management when it comes to improving production goals and work rules.⁶ Overall, gung-ho public sector union members are less likely to see red tape in their agency and to have a higher level of job satisfaction than nonunion members. One reason for their seeing less red tape may be “because they are afforded the opportunity to participate in rule creation through the collective bargaining process.”⁷

Government employee benefits and pensions tend to come under attack when the economy worsens. The common perception is that during economic downturns “government workers” keep their jobs, benefits, and pensions while others lose theirs. Opposition to public employee pensions strengthened in the early 2010s as large states such as California, New York, and Illinois were on the verge of bankruptcy. Some of the opposition came from within the ranks of lower-level government employees who worried about being laid off or were forced to work part time while high-salaried administrators retired with full benefits and big pensions. But it was Wisconsin governor Scott Walker’s successful crusade to reform the state’s public pension system that prompted a number of other states and localities to reexamine the structure and payouts of their public employee pension systems. Where successful, reformers have tapped into feelings of resentment among private sector workers toward public sector employees. (See People in Politics: Scott Walker Tackles Public Employee Unions.)

The most controversial reform is changing the structure of a pension system from a defined-benefit to a defined-contribution plan. Under a defined-benefit plan , a state or local government “promises a salary-like stream of retirement income based on an employee’s longevity and end-of-career earnings,”⁸ and covers the cost of providing it, even when the pension fund may be underfunded. (Severely underfunded pension systems may be paying out more in retiree benefits than in pay to current employees.) In contrast, under a defined-contribution system, the government “provides employees with some fixed amount toward their retirement while they are working, allowing them to invest the money on their own.”⁹ This system places the responsibility for managing public employees’ retirement savings on the employees themselves, not the state or local government’s taxpayers.

Regulations usually do not involve large amounts of direct government expenditures. Instead, regulatory policy allows governments to shift costs to private firms and individuals by directing them to spend money and resources to comply with regulations. Indeed, often a regulatory approach to public problems is preferred by politicians precisely because it does not involve the direct expenditure of tax monies. For example, state governments do not appropriate money for power plants, but their regulatory agencies can impose costs on private electric utilities by mandating safety regulations, employment rules, and even the rates they are permitted to charge customers. However, if a state’s regulatory environment becomes too burdensome, it may become more difficult to attract new jobs and industries. Economic development groups routinely publish rankings of state business climates; regulations are one of the key factors used to calculate those rankings.

Political conservatives have mounted a reform movement in state and local government, centering on the notion of the “privatization” of public services. In the broadest sense, privatization includes the shifting of many responsibilities from government to the private marketplace. “Load shedding” implies that government should sell off many of its enterprises—for example, housing projects, airports, and stadiums—to private individuals or firms that would operate them more efficiently and effectively. But privatization has also generally come to mean greater reliance on private and not-for-profit providers of governmental services functioning in a competitive marketplace and giving individuals greater choice in services.

Privatization recognizes a distinction between government provision of a service and government production of a service. Governments may decide to provide citizens with certain goods and services—for example, schools, police and fire protection, garbage collection, bus transportation, and street maintenance—but not necessarily produce these services directly through government entities—public schools, municipal police and fire departments, municipal garbage collection, city-owned buses, and city street maintenance departments. Rather, a variety of other methods of “service delivery” are available that rely more on private or not-for-profit, competitive producers, and individual choice.

The following are among the most common methods of privatizing the provision of government services:

• Contracting: Governments contract with private or not-for-profit organizations to provide a publicly funded service. These firms compete to win and keep the contracts by providing quality services at low costs.

• Franchising: Governments grant exclusive contracts for a certain period of time to a private firm to provide a monopoly service—for example, cable television or garbage collection. The private firm collects fees directly from citizens under contractual terms agreed to by the government. The franchise firm may pay a fee to the government for the privilege. Government may terminate the franchise for poor performance or excessive fees charged to citizens.

• Grants: Governments provide direct grants of money to private firms or nonprofit organizations conditioned on their providing low-cost services to citizens. Grants are typically made to hospitals and health facilities, libraries and cultural centers, and low-cost housing projects, among others.

• Vouchers: Vouchers are given directly to citizens who qualify for them, allowing these citizens to exercise free choice in selecting the producers of the service. Unlike grants, in which the government chooses the producers of the service, vouchers give citizens the power to choose the producer. Producers compete to attract citizens who have vouchers; the vouchers are later turned in to the government by producers for cash. For example, rent vouchers to the poor or homeless allow them to select housing of their choice; grants to public housing organizations oblige the poor and homeless to seek shelter in specific projects. Education vouchers (see Chapter 16) would allow parents to choose any school, public or private, for their children. Schools would compete to attract pupils, cashing in their accumulated vouchers.

Surveys show that at the state level, the most commonly privatized (contracted out) programs and services are in the corrections, education, health and human services, transportation, and personnel areas. At the local level, they are (in descending order):¹⁰ vehicle towing and storage; commercial and residential solid waste disposal; day care facilities; street light operation; traffic signal installation/maintenance; street repairs; bus system operation; ambulance service; airport operation; and hospital operations/management. A few cities and counties have even privatized jail operations, building and grounds maintenance, data processing, tax billing, delinquent tax collection, and other functions traditionally performed by government employees. Regardless of whether it is at the state or local level, public officials find privatization decisions difficult and often politically charged. (See “Up Close: Privatizing Prisons: The Pros and Cons”).

Privatization is usually defended as a cost-saving measure—a way of reducing the waste, inefficiency, and unresponsiveness of “bloated bureaucracies.” It is argued that private contractors, operating in a competitive marketplace, can provide the same services at much lower costs than government. Privatization advocates also believe that businesses and nonprofits have a greater propensity to be innovative and have more “resources in computer technology, high volume processing equipment, and specialized personnel, plus the flexibility to assign [workers] wherever they are needed most.”¹¹ At the same time, privatization is seen as strengthening private enterprise.

But privatization is usually opposed by powerful political groups—especially municipal employees and their unions and teachers’ unions and public school administrators. They argue that the cost savings of privatization are often exaggerated and that the savings come at the price of reduced quality and/or a failure to serve all of the people. From the government employees’ perspective, “privatization threatens job security, pay and benefits, working conditions, and career opportunities.”¹² Some critics worry about the loss of public control of services and argue that government contractors and franchises can become at least as arrogant and unresponsive as government bureaucracies. For example, some prison reformers argue that privatizing corrections facilities treats offenders as

“commodities” instead of human beings. These latter problems, the loss of accountability and compassion, become big concerns when governments do not properly audit contractors and subcontractors, as was the case with post-Katrina rebuilding in New Orleans.¹³

Reformers have also argued that “Our fundamental problem today is not too much government or too little government . . . [but] the wrong kind of government.” Rather than rely exclusively on either bureaucratization or privatization, they call for an “entrepreneurial” government that “searches for efficient and effective ways of managing.”

How is the “entrepreneurial spirit” to be encouraged in government? By reinventing government. A widely read and cited book, Reinventing Government, sets out ten principles of government entrepreneurialship:

• Steer rather than row. Separate policy decisions (steering) from service delivery (rowing). Government should focus on steering while relying more on private firms to deliver services. Government should be a catalyst.

• Empower people rather than simply deliver services. Governments should encourage communities and neighborhoods to undertake ownership and control of public services. Government should be community owned.

• Inject competition into service delivery. Competition between public and private agencies, among private contractors, or between different governments encourages efficiency, innovation, and responsiveness. Government should be competitive.

• Make government organizations mission driven rather than rule driven. Do not prescribe how government organizations should go about doing things by prescribing rules, procedures, and regulations but, rather, set goals and encourage government organizations to find the best ways to achieve them. Government should be mission driven.

• Encourage governments to be results oriented. Government bureaucracies should be measured by their results, not their size, numbers, or services. Government should fund outcomes, not inputs.

• Focus on the needs of customers, not the bureaucracy. Governments should treat citizens as if they were customers, responding to their needs, “putting them in the driver’s seat.” Government should be customer driven. (See “Did You Know? Bureaucrats Challenged to Write It Simple!”)

• Encourage governments to earn money through user charges. Charging the users of government services, whenever possible, is fair; it raises revenues and balances demands for services. Governments should be enterprising.

• Practice prevention rather than cure. Problems from fires to ill health are cheaper to address through prevention than services. Government should be anticipatory.

• Decentralize government organizations. Decentralization increases flexibility, effectiveness, innovation, morale, and commitment. Government should be decentralized.

• Use market incentives to bring about change rather than command and control. Market mechanisms are preferred over regulations. Government should be market oriented.¹⁴

Note that these are guiding principles, rather than recommendations for changes in the structure of state and local government. Unlike earlier reformers who focused on structural changes, today’s reformers are more concerned about how governments go about their tasks.

The search for new ways of doing things is ongoing. Pick up any public administration text and you can read about a multitude of past efforts, including management by objectives (MBOs), zero-based budgeting (ZBB), total quality management (TQM), performance-based management (PBM), balanced scorecard (BSC), and best practices (BP), to name a few. Some long-time public employees are frustrated with “this constant cycle of reform by acronym.”¹⁵ But it’s no different in government than in the business world, where new books on “how to be a success in corporate America” are constantly being released in the wake of new technologies or on the heels of management scandals.

Public administration experts are always in search of ways to increase the odds that a reform will succeed on its own merits and not be stymied by changes in political leaders. Three widely cited pieces of advice are (1) Codify reforms in law. If it is in the law that agencies have to produce performance reports—it can’t be completely ignored by the next governor or mayor; (2) Make reforms quietly and gently. It helps to avoid calling a reform a reform and to use words like “progressive” so that a new administration will not associate it with previous administration; and (3) Do not try to make too many changes at the same time. When too much change occurs simultaneously, the organization doesn’t have time to learn from it and employees get “reform fatigue.”¹⁶

A common perception is that government employees keep their jobs during tough economic times while workers in the private sector lose theirs. In fact, that perception fuels antigovernment sentiments among the public at large. The reality is that major downturns in the economy affect governments too and require them to make difficult cost-cutting decisions regarding their employees. This is necessary because personnel costs are a large part of every government’s budget (people provide services). During the Great Recession of the 2000s, 71 percent of all the nation’s cities made personnel-related cuts ranging from hiring freezes, layoffs, and furloughs to major reductions in employee health care and pension benefits.¹⁷ Counties took similar actions. A number also entered into regional cooperative service agreements and privatized county services to cut personnel costs. (See Figure 8-4.) The need to “reinvent” and reform government is always urgent and difficult when fiscal stress is most intense. But sometimes that urgency can be a catalyst for changing inefficient and ineffective bureaucratic organizations, particularly those top-heavy with administrators or with histories of costly unethical behavior.

Many governments have established ethics commissions or committees and require all employees to engage in some form of ethical conduct training as a condition of employment. Most often ethics codes prohibit employees from engaging in political activities at work, soliciting or accepting gifts from certain types of persons (e.g., contractors doing business with the government, lobbyists, someone seeking an official action from the employee or their agency), asking for or taking bribes, using one’s position to get special favors for a family member or business associate, or revealing confidential information to an unauthorized person for personal gain or benefit.

Some state and local governments have ethics specialists in their personnel and legal offices to develop training materials, conduct training, and advise employees on ethics

matters. All 50 states have whistle-blower protection laws protecting an employee from retaliation when he or she reports someone for illegal or unethical conduct.¹⁸ Many employees belong to professional associations, such as the American Society for Public Administration, that have developed their own ethics codes of conduct.

Despite the many criticisms heaped upon state government agencies, there is evidence that many are performing reasonably well, certainly better than in years past. An extensive evaluation of state government administrative performance by a team of experts from the Pew Center on the States and Governing magazine and some university professors graded states in four areas: money, people, infrastructure, and information. Most states got Bs and Cs. There were only a handful of As but no Fs.¹⁹

More recent analyses have focused on how states have used new technology to improve performance and enhance accountability. Every two years, the Center for Digital Government grades states on their use of digital technologies, using five broad criteria: (1) adoption of new technologies designed to improve operations or services, (2) quantifiable hard and soft-dollar savings or benefits, (3) progress over the last two years, (4) innovative solutions or approaches, and (5) effective collaboration. The most recent evaluation gave 8 A grades, 22 Bs, 18 Cs, and 2 Ds.²⁰

Another study by the U.S. Public Interest Research Group, a consumer advocacy group, graded states on the extent to which they have websites providing an easily accessible and searchable detailed expenditure database that enables citizens to see exactly how the state spends taxpayer dollars. Most states got Bs and Cs for their online transparency and seven states got As. The five states that received Fs lacked detailed data. The transparency scores represent a marked improvement. The study’s co-author put it in context: “Fifteen years ago, a state being transparent meant that if you went to the right office and knew exactly what form to ask for you might get what you wanted a few weeks later.”²¹ The improvements are mostly attributable to better technology and greater citizen demands for access to government information.

The budgetary process begins with the governor or mayor’s budget office sending to each governmental agency and department a budget request form, accompanied by broad policy directives to agency and department heads about the size and shape of their requests. Often these budget requests must be made 6 to 12 months prior to the beginning of the fiscal year for which the requests are made; state and local governmental fiscal years usually run from July 1 to June 30.²² After all requests have been submitted to the budget office, the serious task of consolidating these many requests begins. Individual department requests

are reviewed, revised, and generally scaled down; often departments are given more or less formal hearings on their budget request by the budget director. The budget agency must also make revenue estimates based on information it obtains from the tax department.

Governors or mayors must decide the overall size and scope of their budget; whether particular departmental requests should be increased or reduced, in view of the programs and promises important to their administrations; whether economies should involve overall “belt tightening” by every agency or merely the elimination of particular programs; or finally, whether they should recommend the raising of new taxes or the incurring of additional debt. These decisions may be the most important that mayors or governors make in their terms of office, and they generally consult both political and financial advisors—budget and tax experts, party officials, interest group representatives, and legislative leaders. Ordinarily, these difficult decisions must be made before governors or mayors present their budget message to the legislature. This budget message explains and defends the final budget presented by the chief executive to the legislative branch.

Budget making involves bringing together the requests of all existing state agencies, calculating the costs of new state programs, estimating the probable income of the state, and evaluating these costs and income estimates in light of program and policy objectives. The final budget document is submitted to the legislature for its adoption as an appropriations bill. No state monies can be spent without a legislative appropriation , and the legislature can make any alterations in the state budget that it sees fit. Potentially, then, a legislature can control any activity of the state government through its power over appropriations, but as a practical matter, the legislature seldom reviews every item of the governor’s budget. In practice, budgets tend to reflect the views of those responsible for their preparation, namely the governor.

The most common budgetary behaviors in the states are as follows:

• Agency heads consistently request higher funds.

• Governors’ budget staffers consistently reduce agency requests.

• The governor consistently pursues a balanced budget at higher expenditure levels than the previous year.

• Legislatures approve higher appropriations but try to blame the governor if higher taxes are required.

The pressure for budget increases comes from the requests of agency officials. Most agency officials feel compelled to ask for more money each year. Requesting an increase in funds affirms the significance and protects the status of agency employees, and it assures clientele groups that new and higher standards of service are being pursued aggressively. Requested increases also give the governor’s office and the legislature something to cut that will not affect existing programs. The governor’s budget staff generally recognizes the built-in pressure to expand budgets. The budget staff sees itself as “cutters.” Agencies press for budgetary expansion with better programs in mind, while the governor’s budget staff tries to reduce expenditures with cost cutting in mind (see “Up Close: How to Win at the Budget Game”).

The governor’s budget generally appears in the legislature as an appropriations bill, and it follows the normal path of any bill. It is assigned to an appropriations committee, which often holds hearings on the bill and occasionally reshapes and revises the executive budget. The fate of the governor’s budget in the legislature generally depends on his or her general political power, public reactions to recommendations, the degree of support he or she receives from department heads (who are often called to testify at legislative budget hearings), his or her relationships with key legislative leaders, and the effectiveness of interest groups that favor or oppose particular expenditures.

After it is passed in identical form by both houses, the final appropriations measure is sent to the governor for signature. If the governor has an item veto, he or she can still make significant changes in the budget at that time.

What forces are actually involved in the budget-making process? Invariably, the forms provided by the budget office require departments to prepare budget requests alongside the previous year’s expenditures. Decision makers generally consider the last year’s expenditures as a base (a starting point). Consequently, active consideration of budget proposals is generally narrowed to new items or requested increases over the last year’s base. The attention of governors and legislators, and mayors and councils, is focused on a narrow range of increases or decreases in a budget. A budget is almost never reviewed as a whole every year, in the sense of reconsidering the value of existing programs. Departments are seldom required to defend or explain budget requests that do not exceed current appropriations; but requested increases in appropriations require extensive explanation, and they are most subject to downward revision by higher political officials. Consequently, “padding” in existing budget lines is far less obvious than in proposed new lines of spending or in lines featuring big increases over the previous budget year. A sizable portion of the proposed spending is “untouchable” due to earmarking and other uncontrollable expenses.

Chief executives have little influence over many items of state and local government spending. Over 50 percent of state finances come from specially earmarked (dedicated) funds. It is common to earmark in state constitutions and laws certain funds for particular purposes, such as gasoline taxes for highways or lottery funds for education. The earmarking device provides certain agencies with an independent source of income, thus reducing the chief executive’s control over operations. What is left, “general fund expenditures,” is also largely committed to existing state programs, particularly welfare and education.

Politicians typically campaign on platforms stressing both increased service and lower taxes. Once in office, however, they typically find it impossible to accomplish both and difficult to accomplish either one. Often new programs planned by a governor must be put aside because of “uncontrollable” growth in existing programs. For example, additional money may be required to educate more students who are entitled to an education under existing programs; or money must be found to pay the welfare benefits of additional clients or the Medicaid costs of additional patients “entitled” to care under existing laws. These entitlement programs constitute over three-quarters of state general fund appropriations. Another uncontrollable expense occurs when the federal government issues “mandates” requiring state and local governments to spend money to meet certain legislatively dictated criteria. Lawsuits and litigation are a third, and growing, uncontrollable expense.

Finally, in some jurisdictions—usually smaller ones—the budget format is primarily nonprogrammatic. Specific expenditure items, or “lines,” are listed under broad categories such as “personnel services,” “contractual services,” “travel,” “supplies,” or “equipment.” (This is known as a line-item, object-of-expenditure format.) Needless to say, it is impossible to tell from such a listing exactly what programs the agency is spending its money on, which is why many governments no longer exclusively use this budget format. Even if these categories are broken down into line items (e.g., under “personnel services,” the line-item budget might say, “John Doaks, Assistant Administrator, $35,000”), it is still next to impossible to identify the costs of various programs. It is also impossible to determine whether the program efficiently, effectively, or equitably achieved what lawmakers had in mind when they funded it.

Over the years, reform-oriented administrators have favored expanding the amount of information included in budgets—making them more useful as management tools, not just as accounting tools, although financial control is still a major function of budgets. Reforms over the years have attempted to tie inputs (spending) to outcomes (results)—performance budgeting. Since many governments are in a “perpetual fiscal crisis,” they are always in search of ways to “do more with less” . . . and, at the same time, to do it better.²³ Reformers have also emphasized putting budgetary information in more “citizen-friendly” or “customer-friendly” formats and making the process more accessible to citizen input in response to growing taxpayer demands for more accountability. They have also adopted the practice of comparing their jurisdiction’s budget and performance with other effective and efficient jurisdictions—benchmarking.

That doesn’t mean that all agency heads or public employees automatically or enthusiastically buy in to the latest budget reform. Often it’s not that they are resisting change as much as it is that their staff is already stretched thin. New budgeting systems, like new technology, are often perceived by managers as having steep start-up costs whether they are in the form of staff training, new data entry requirements, or organizational restructuring. Overall, however, experts agree that the cumulative effect of these reform efforts over the years has been to make government more accountable for its spending.

The “incremental” nature of budgetary politics—and reforms—helps reduce political conflict and maintains stability in governmental programs. As bruising as budgetary battles may be in state capitols and city halls, they would be much worse if governments tried to review the value of all existing expenditures and programs each year. Comprehensive budgetary review would “overload the system” with political conflict by refighting every policy battle every year.

Unlike the federal government, most state budgets must be balanced. The same is true for most cities, counties, and school districts. This means that chief executives must submit to the legislature a budget in which projected revenues are equal to recommended expenditures. And the legislature must not appropriate funds in excess of projected revenues. There are, of course, many accounting devices that allow governors and mayors and legislatures and councils to get around the balanced budget limitation—devices known as “blue smoke and mirrors.” These include “off-budget” special funds, separate state authorities, and capital budgets (see Chapter 14).

Nonetheless, balanced budget requirements are a major restraint on state and local government spending. Indeed, often revenue “shortfalls”—revenues that fall below those estimated for the year in the budget—force painful mid-year spending cuts. Only a few states allow deficits to be carried over into the next fiscal year. And these carryover deficits force governors and legislatures to be more conservative in their spending plans for the following year.²⁴

State and local government agencies and employees are constantly reacting to changes in the political and economic climate—and often catching flak for their responses from some citizens, but praise from others. Such is life in the bureaucracy.