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Revolutionary Budget Process Underway in Michigan Wins Prestigious National Accolades for Wash. State & Consulting Firm Working Here
Thursday July 28, 2005 3:29 pm ET

The Public Strategies Group Helps Another Client Win an 'Oscar' for Reinventing Government
LANSING, Mich., July 28 /PRNewswire/ -- A revolutionary budget process employed by Michigan's Legislature has won national accolades for the state that first used it, Washington, and the public sector consulting firm that inspired the process, The Public Strategies Group (PSG). One of PSG's clients, the State of Washington, was named one of 18 finalists for the prestigious Innovations in American Government Award -- often referred to as the "Oscars" of government -- from the Ash Institute for Democratic Governance and Innovation at Harvard University's Kennedy School of Government ( http://www.innovations.harvard.edu/ ). Washington was chosen from a field of more than 1,000 applicants. At a ceremony in Washington, D.C. yesterday, another client, the State of Iowa, was named one of six recipients of the institute's highest award. Both states were recognized for projects designed and implemented in partnership with PSG. "It is enormously exciting to help our clients achieve award-winning innovation," said PSG CEO Babak Armajani. "Our goal is to be the world's number one resource for reinventing government and this recognition shows we are doing that." BUREAUCRACY-BUSTING STATE AGENCIES The State of Iowa won the "Oscar" for launching a bureaucracy-busting innovation PSG calls Charter Agencies ( http://charter.iowa.gov/ca.html ). State agencies in Iowa volunteered to sign "charter" agreements with Gov. Tom Vilsack, giving them greater administrative flexibility as an incentive to better deliver public services. In exchange for increased flexibility and authority, Charter Agencies accepted the charge to find better ways to meet citizens' needs, to be held accountable for those results and to reduce costs and/or generate more revenue. In just the first year of operation, Charter Agencies exceeded their financial performance targets by 50 percent, generated $22 million in savings for the State and launched scores of customer service improvements (http://iowaregov.typepad.com/ia_weblog/files/charter_agency_s_may_2_05.doc).

A WHOLE NEW WAY TO BUDGET The State of Washington was recognized as a finalist for spearheading a first-of-its-kind budgeting approach that it calls Priorities of Government. The traditional budget process quickly becomes an exercise in cutting services, raising taxes or both. The Priorities of Government approach as pioneered in Washington begins by asking "How can we get the most results that citizens value for the money they pay in taxes, fees or charges?" The process establishes priority results that citizens value and challenges agencies or departments to propose how they could best achieve those results. From the hundreds of proposals submitted, elected officials buy those they believe will make the greatest contribution to the citizens' priority results. Washington State has used PSG's Priorities of Government process since it was launched by Gov. Gary Locke in 2002. It has been widely credited with fixing the state's $2.6 billion budget deficit and helping restore the public's faith in the public sector. The Michigan Legislature is the first legislative branch in the country to adopt the Priorities of Government approach to producing a state budget. PSG has been working with leaders in both the House and Senate since January 2005 to establish a budget process that:
-- is constructed around the results that Michigan citizens expect; -- will clearly identify how much of the approximately $40 billion the state plans to spend in FY2006 will go towards delivering each result; -- is based on a thorough examination of every program in every fund (not just the General Fund); -- evaluates and ranks those programs based on their ability to produce the results that citizens expect; and -- recommends buying those programs that rank the highest and eliminating those programs that "fall below the line" where the amount of money available runs out.

"It has been an honor to work with leaders in the House and Senate on this important reform," said PSG's Project Lead Steve Struthers. "The fact that the approach has been embraced by Michigan's Republican legislative leaders and its Democratic Governor demonstrates that it is grounded in common sense and citizens' interests." The "budgeting for outcomes" process is profiled in the recent PSG book, The Price of Government (David Osborne and Peter Hutchinson), and PSG has been hired to help implement similar budgeting processes around the country, including the states of Iowa and Mich.; the cities of Azusa, Calif., Los Angeles, Calif., Fort Collins, Colo., Wichita, Kan. and Spokane, Wash.; and the counties of Snohomish, Wash. and Multnomah, Ore. ANOTHER PSG PROJECT IN MICHIGAN PSG has also been retained by the Defense Reutilization and Marketing Service (DRMS) division of the U.S. Defense Logistics Agency in Battle Creek, Mich. DRMS processes surplus military property from around the world and then readies it for re-use within the Department of Defense (DOD) or other federal and state agencies or for sale to the general public. PSG has been working with DRMS executives since 1995 to transform DRMS into a results-driven, customer-focused agency.

DRMS has substantially reduced its infrastructure while continuing to meet the ever-changing demands of its customers around the world. It has implemented pioneering partnerships with the private sector that have resulted in increased sales of surplus military property. It has also recently completed a reorganization that for the first time assigns customer relationship representatives to particular customer segments. A TRACK RECORD OF SUCCESS This isn't the first year PSG principals have been involved in the Harvard government "Oscar." In addition to this year's win and finalist finish, PSG clients won the award in 1986 (http://www.innovations.harvard.edu/awards.html?id=3494 ), 2000 (http://www.innovations.harvard.edu/awards.html?id=3879 ) and one was selected as a semifinalist in 1990. Iowa's Charter Agencies and Washington State's Priorities of Government were also recipients of the Council of State Governments' 2004 Innovations Award. St. Paul-based PSG has six offices located around the country (Boston, Omaha, Los Angeles, Portland, Ore. and Washington, D.C.) and has successfully led or assisted in the transformation of public organizations at all levels (state, federal and local) and on six continents. PSG works exclusively with public organizations, helping them transform themselves into more effective, customer-focused enterprises. PSG generates about $8 million a year in revenue. The firm has 17 partners and draws on a network of more than 50 consultants around the country. For more information, visit http://www.psg.us/ .

Source: The Public Strategies Group