Brennan: Doing less with less

By Tom Brennan |

Gov. Mike Dunleavy has a challenging task ahead of him in trying to right-size Alaska’s state government. He has already stated that we have more government than we can afford and he plans to tackle the problem.

The work of governing and providing appropriate government support is carried out by the state’s 15,000 employees and could probably be done by far fewer people. That statement is based on the the Pareto Principal which states, among other things, that 20 percent of the workers produce 80 percent of the result.

The same 80/20 principal holds for the private sector, but the problem for any governor facing the downsizing challenge is that state workers are protected by law and the power of their unions. In private companies, layoffs are painful for those who lose their jobs, but reducing the size of a workforce is quite possible. It is far more problematic with government employees.

Dunleavy already has called for the resignations of at-will state workers and that’s a start on the problem. The at-will jobs are generally in supervisory positions — and their salaries accordingly are higher — but only about 1,500 state workers received those letters, 10 percent of the workforce. And the governor necessarily will give only a portion of those individuals their walking papers.

Incoming governors customarily ask for the resignations of some at-will workers. Gov. Bill Walker asked for such letters from about 250 high-level political appointees. Generally, the governors fill those jobs with their own choices, but it seems likely that Dunleavy will be leaving some chairs empty and the responsibilities reconsidered and job requirements reduced to accommodate a smaller-size senior workforce.

If such an approach could be used on the entire state workforce, the size of state government could be cut at least by half (if not 80 percent as suggested by the Pareto Principle). That would require that senior managers rethink the requirements of each job and what it would take to serve the public adequately. Many jobs effectively could be downsized to accomplish essential public work and skip whatever can be skipped.

But don’t think we have a lot of state employees who simply are goofing off. That is almost never the case. Experienced senior managers will tell you that if an employee has only six hours work to do in an eight-hour day he or she will find ways to fill the other two hours with other matters. One can always do more and any skilled employee can find useful ways to fill such time. The question that needs to be asked is whether such work adds sufficient value for the employer — the state of Alaska — to pay a person to do it.

If such tasks could somehow be identified and eliminated, the state workforce could be reduced by at least 25 percent. Doing that kind of head-scratching would be a challenging task but it is theoretically possible and astute managers could accomplish and implement it.

Governor Dunleavy and his team seem to be the right people to institute such a change. Whether they will go in that direction remains an open question, but something of the sort seems highly likely. The governor has stated that we have more government than we can afford, which suggests he does indeed plan somehow to right-size our workforce.

Dunleavy’s new budget director, Donna Arduin, already has announced that the administration will be going in that direction. She said of state agency heads “rather than asking agencies to do more with less, we’re asking them to do less with less in many instances.” That seems like the right direction to get the job done.

Dunleavy also has promised to pay Permanent Fund dividends according to the established formula and to repay Alaskans for the amounts they were shorted during the reign of Gov. Bill Walker.

Paying such dividends will almost certainly require dipping once again into the Earnings Reserve Account both for the dividends and to cover whatever deficits remain after government is reconfigured for the years ahead. Dipping into the Earnings Reserve to pay for anything except dividends was controversial, but it was indeed necessary. The time had come.

The Constitutional Budget Reserve, which was established by the Legislature with sizable settlements from legal disputes with the oil and gas industry, was the main source of extra cash to cover deficits for many years. But the CBR funds were mostly one-time payments and that account was eventually drawn down to the point where it could no longer cover deficits — with around $2 billion left in the till.

Fortunately, the Earnings Reserve is constantly replenished by earnings of the main Permanent Fund account. It was about $12.8 billion last July before it was tapped for dividends and deficits, but by December it had grown to $16.6 billion. At that rate, it should be something on the order of $18 billion by June 30. (Keeping in mind that I was an English major and high finance is not my strong suit.)

But the situation does look promising for our new governor and his team, if they can get the right-sizing thing accomplished.

 

One Response to Brennan: Doing less with less

  1. R-Dubya January 27, 2019 at 7:01 am

    There will most likely be several actions that contribute to an overall solution to ‘Right-Sizing’ State government. Probably, the greatest benefit to the SOA would be to somehow eliminate public employee unions.

    Other worthy measures may involve the following:
    – Rewrite the roles and responsibilities for all SOA employees.
    – Apply critical analysis and justification for each Department Budget, with the approach of cutting 25% from all Departments (except DOT).
    – Completely eliminate burdensome ‘non-essential’ services and/or programs.
    – Dipping a little bit into the Permanent Fund, as ‘only’ needed – necessary.

    Reply

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