Thursday, March 27, 2008

Efficiency Study Offers Mixed Mesage

Government efficiency studies are all the rage.

Across the U.S., cities, counties and states are paying for studies ostensibly aimed at increasing efficiency and decreasing costs. In our community alone, more than $1.2 million has been spent by city and county governments. The $700,000 version that Memphis city government commissioned has finally broken into the news a year after it was first delivered to city officials.

Memphis Mayor Willie W. Herenton leaned hard on the study to justify his recommended closings of libraries and community centers, and The Commercial Appeal reporter Amos Maki mined its conclusions for an article today.

Required Reading

Interestingly, it seemed from the reactions that few people read it when the 185-page report by Deloitte Consulting Inc. was first issued March 16, 2007. The news media had given it cursory attention until Mr. Maki brought his energetic reporting style from business to City Hall.

It’s been a curious phenomenon, especially considering how damning much of the report is about the general disarray of city operations. “The city does not have a well-documented set of strategies and objectives to guide its future plans and ongoing operations,” it said in an opening salvo on page 3. “This situation results in a lack of direction and clear priorities to guide management and align services with operational and financial goals.”

Then, there’s this one about the Park Division’s plan to close community centers: “We reviewed the plan and discussed it with divisional management and other key internal stakeholders. While the plan seems reasonable, we could not determine how it relates to any documented strategy within the city. In summary, we were unable to reach a conclusion as to how it related to providing services to citizens, containing costs or other objectives.”

It’s an especially telling assessment in light of Mayor Herenton’s citation of the study for his planned closings.

Down For The Count

The report also issues its equivalent of a four-count indictment of city management. The lack of clear strategies and objectives produces these results:

• Management decisions may not be guided by consistent city-wide objectives

• Services levels may not be based on clear priorities and financial capabilities

• Budgeting decisions may not be strategic in nature and lead to cost reductions in high priority operations

• A lack of consensus may exist between City Council and city management related to the objectives and priorities that guide city policy and operations.

The report also criticized the city budgeting process as “a compliance exercise where more emphasis is placed on inputting information into the city’s budget development application than analyzing the information that is submitted.”

Selective Memory

All in all, in reading the barrage of criticism of city operations, it’s almost defies logic that Mayor Herenton managed to pull out the paragraphs that talked about closing community centers and libraries.

But here’s the truth about these efficiency studies: Most of the time, they come up short in their impact, largely because they generally take a distinctly accounting and financial approach to analyzing public services. That’s no surprise since firms with backgrounds in accounting have dominated the field.

Unfortunately, the consultants often forget that public budgets aren’t just about rows of numbers. They aren’t just accounting documents, or an inventory of programs or line item after line item of incomprehensible headings for revenues and expenditures.

People Will Perish

More to the point, public budgets are the financial embodiment of the government’s vision for the future. They should capture the city’s aspirations and invest in the success of its people and their neighborhoods.

The Harvard Business Review was right when it concluded years ago that despite political rhetoric calling for government to be more businesslike or for government to be run like a business, there’s this simple fact of life – governments are not businesses and cannot run like them.

That’s because government at its heart is intentionally inefficient. The framers of the Constitution made it that way with the checks and balances built into the system to discourage political fiefdoms and to set up systems with an ornate set of oversight and sign-offs.

Middle Ground

It is a culture that is suffocating for entrepreneurial public managers whose talents are eroded until most of them leave or fall into lock step with the general mediocrity. But, efficiency studies are rarely about unleashing the innovative change agents trapped in the machinery of government.

Instead, they are a compendium of recommendations largely based on financial computations and sometimes simplistic notions of the role of public services in a city with needs as deep as our own. For example, is it really enough to recommend the closure of the White Station library based on the fact that it’s four miles from the main library, as opposed to weighing the significant role that it plays in anchoring a critical East Memphis area?

Another prevalent weakness of these efficiency studies is that they largely rely on the opinions and observations of the usual suspects. In this way, it often ends up with a stilted understanding of issues like library services.

Getting The Facts Right

For example, the efficiency report says that the library system never implemented the conclusions of a 1989 analysis that concluded that many branches were inadequate. Its analysts seem to miss the fact that the library system tried to implement the recommendations but its regular requests for more money were spurned by city officials.

We shouldn’t be too critical of Deloitte officials for getting the facts wrong. After all, Mayor Herenton managed to do the same. In one of his interviews justifying the closing of libraries, he talked about the failure of the former library director to improve some generally deplorable conditions of some branches. He seemed to be unaware that it was his administration that eliminated the library CIP requests from the budget process more than three years ago.

In fact, if you wanted to hear someone talk about the unequal quality of the branches and what was needed to correct it, they only needed to ask former library director Judith Drescher, who was an eloquent advocate for better conditions.

Deaf Ears

Ms. Drescher was also a proponent of regional library branches, a fact that was unnoted by the consultants when they wrote: “We encourage the City to consider moving toward a library system operating model that would provide for regional branches in accessible and highly visible locations.”

Actually, that’s exactly what Ms. Drescher did for about a decade, but there was never the political will to get it done in the city and county buildings.

All in all, efficiency reports are interesting reading for policy wonks like us. It’s just worth keeping in mind that they’re partial snapshots of public services, because the simplified approach to weighing the worth of programs in terms that are only dollars and sense routinely ignores the social costs and the social importance of certain programs to certain neighborhoods.

That may not make any sense to an accountant, but they make all the sense in the world to people interested in building a city.


Anonymous said...

Interesting. Wasn't there also an efficiency study of MCS a few years ago?

Anonymous said...

While it is true that accounting firms often miss the policy-making steps and concentrate on numbers to the exclusion of community standards, the efficiency study by Deloitte does get at the problem in and of Herenton's administration.

The quote - "The city does not have a well documentated set of strategies and objectives to guide its future plans and on-going operations" - is pregnant with what's wrong Memphis. Although I would put "objectives" before "strategies", there is virtually no planning (objectives) and programming (strategies)that preceeds budgeting in the city. At best what little planning and programming that exists is not "well documented" and the city council is unable to make justifiable budget decisions.

Herenton says that he finds good managers and lets them do their jobs. This approach has produded the "silo effect" with little coordination between divisions. The loss of Rick Masson left a vacuum that made things worse. In short the city does not have a plan that is continuously being evaluated and updated.

Smart City Consulting said...

There is one thing that a consultant from any company in the world would recognize without fear of contradiction. The day Rick Masson walked out the front door of City Hall in retirement was the day that city government declined.

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