Let's step back. Currently, PSG is the State of Iowa's transformation partner. We serve as an advisor to Governor Vilsack and his Cabinet with a charge to both reduce state expenditures and improve service. Over the past year and a half, PSG has worked extensively with the Governor's administration, the Legislature, local governments and Iowa communities. I've written previously about two innovations that have resulted. We've helped design and now implement a new system to improve the safety and permanency of Iowa's neglected and abused children. In March, I described the concept of "Freedom Communities" in which multiple local jurisdictions could come together to merge or share at least 50% of their services in exchange for additional freedom from state mandates.
Now I want to celebrate another aspect of this reinvention partnership - the charter agency. These are state agencies that have been granted greater flexibility in exchange for accepting greater accountability for results.
Celebrating their Birthday. Charter agencies in Iowa are one year old!
The 2003 Iowa Assembly passed, and the Governor signed into law, legislation establishing Charter Agencies. There are, at present, six: the Alcoholic Beverages Division of the Department of Commerce, Department of Corrections, Department of Human Services, Department of Natural Resources, Department of Revenue, and the Iowa Veterans Home. These pioneer agencies, or subsets of agencies, have agreed to be held accountable to produce better, measurable results for Iowans while either cutting spending or generating new revenue to do so. In exchange, they have greater flexibility in such administrative matters as agency personnel, procurement, and information technology decision-making.
Celebrating the Pioneer's Stories
Each of the six has its own story. Here are three -
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The Department of Corrections reduced their pharmaceutical costs over $200,000 last year. Just one trip to your local pharmacy will tell you how expensive prescription drugs have become in recent times. John Baldwin, the Deputy Director of Administration, explains that pharmaceutical costs had risen for them between 10 and 15% annually - to a historic high of almost $4 million in FY 05. DOC employees knew a solution was needed. In response, members of DOC and Iowa's Department of Administrative Services (DAS) worked together to find a creative and cost-effective answer. Leveraging some Charter Agency freedoms, they created an innovative twist on the pharmaceutical bidding process.
Baldwin explains, "We used creative thinking to develop a new bidding process that offers providers incentives for cost savings." Rather than issuing a typical request for a single-source provider of all pharmaceutical needs, the department submitted bids to multiple providers, while reserving the right to accept portions of any bid submitted.
To ensure fairness, bids were submitted to both public and private providers throughout the state. Iowa's General Services Enterprise, Walgreens, HyVee, the University of Iowa, and many others had the chance to compete. Ultimately, DOC's current provider won the bid by dramatically reducing costs across the board, while increasing the value of services it provides. "In addition to cost savings, the new bargain included free consultation services and an option for credit on returned drugs," said Kent Paulsen, purchasing agent.
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The Iowa Alcoholic Beverages Division (ABD) has transferred more than six million dollars to the General Fund - more than they committed to. One reason they were able to do so is their new ability to do variable liquor mark-ups effective March 1, 2004. This has initially been tested with the Vodka category with great promise.
Also, the ABD recently resumed direct operation of warehousing and transportation activities. When the former contractor went into bankruptcy, the ABD, in collaboration with sister Charter Agency Dept of Corrections, developed a business plan to resume operation of the warehousing / transportation activities using a combination of state employees and inmate labor from the Iowa Women's Correctional Institute in Mitchellville. The plan will result in a net savings of $1.5 million in operating costs during the next two fiscal years. At the same time, women inmates will gain valuable work skills in a non-traditional work environment, increasing their possibility of employment after parole and providing a source of income available for victim restitution efforts.
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The Iowa Department of Human Services has become the first state to deliver virtually all child support payments to custodial parents by direct deposit or debit bankcards. The change eliminates the problem of lost or stolen checks, ends the annoyance of check cashing fees, and means that many custodial parents will get their child support payment a day or two sooner.
"We're getting out of the business of cutting checks, which are frequently a hassle for customers, and we're saving taxpayers $420,000 a year in postage alone," said Kevin Concannon, director of DHS. Customers may choose to have the payments electronically sent to their own bank through direct deposit, which about half of the recipients have chosen to do. Those who do not sign up for direct deposit receive a ReliaCard Visa through an arrangement with U.S. Bank. About 45,000 custodial parents now receive benefits through the cards.
Celebrating their Recent Recognition
In August 2004, the Iowa's Charter Agencies collectively were selected as one of two Midwestern winners of this year's Council of State Government (CSG) Innovations Awards. Mike McCabe, Director of the CSG Midwestern office, offered his congratulations, "Obviously the selection committee was impressed with the program's success." Late next spring, they will be recognized during CSG's spring national committee meetings.
Celebrating their Innovative Spirit
Tying programs up in red tape while making them accountable for performance is a set up for failure. The Charter Agency concept seems to be a set up for success. In particular, it has given the agencies additional license to innovate. John Baldwin of the Department of Corrections concurs, "One of the biggest freedoms we've exercised is freedom in how we think and how we solve problems".
And, the outside world is noticing. Here's an excerpt from a recent news article:
What made this possible were the new opportunities that came with the "lighter bureaucratic cloud," as Jim Chrisinger (Iowa Department of Management's head of strategic planning and accountability) said. ...You need rules and regulations, but you don't want it to be the only thing that people think about. You need rules to accomplish their purpose, but you don't want them to get in the way of innovation or better service to your customers. Like the bottom line in business is service to your customers, the bottom line for state government is service to Iowans." The agencies say what is ... significant about the past year are the new ideas and programs they've launched, which will forever change and enhance their services to Iowans.
"Government Minus Red Tape Equals Success", Sharon Baltes, Des Moines Business Record, August 9, 2004
Now that's really something to celebrate! Congratulations to all involved.
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