November 19, 2004 — Arnold Schwarzenegger's best-selling New Encyclopedia of Modern Bodybuilding has inspired up-and-coming body builders the world over — providing practical advice on everything from nutrition and workout regimens to psyching out your opponents and effective posing. Who would have thought that it would also inspire me as I served as a director of Governor Schwarzenegger's historic California Performance Review, a project aimed at cutting the flab of state government?
In the Encyclopedia, Schwarzenegger describes how, if you apply a 15-horsepower load to a 10-horsepower motor, the motor will eventually burn out. In contrast, over time the human body will change from a 10-horsepower motor into a 15-horsepower motor, getting stronger to achieve greater results.
We should think of government the same way, which is why the California Performance Review is so important.
In recent years, state expenditures have routinely outpaced state revenues. We are told that our only choices in confronting this imbalance are to raise taxes or cut vital services and watch our quality of life erode. This mindset treats government like a motor that is static and can only produce X amount of services for Y amount of taxes.
The bodybuilding philosophy of state finance, by contrast, sees government like the human body: dynamic, resilient, and able to become more efficient, doing more with less. Using this framework, the California Performance Review is a tour de force directly confronting business as usual, and offering up a healthy lifestyle change to the Sacramento status quo. The report identified $32 billion in savings that can be achieved over five years.
As with bodybuilding, the worst pain of government reform comes with getting rid of the initial flab, and there is plenty of that in California. And this difficult process of change is the reason that many special interests in Sacramento are concerned about CPR. Getting on the treadmill is uncomfortable — particularly when you are so comfy on the couch. But by applying the key lessons of bodybuilding, we can build a leaner, healthier, more efficient state government.
Accountability I: Everyone's In Charge; No One's In Charge
One of the most important steps in bodybuilding is accepting responsibility for your lifestyle and diet, closely monitoring what you do, and then changing it. There is an old saying "what gets measured gets done." That is why so many bodybuilders write down everything they eat in the course of a day and track their workouts with equal detail.
The old saying is true for government as well. Ensuring the greatest bang for the taxpayers' buck requires that government decisions and actions be transparent and that actual performance brings consequences and rewards. Several CPR proposals incorporate this vision and are intended to increase accountability in government.
Currently, state government's executive branch consists of 11 agencies, 79 departments, and more than 300 independent boards and commissions. This structure scatters accountability and confuses lines of authority. Take the state entities responsible for critical infrastructure (roads, water, power) as an example. More than 30 of them are directly involved in this function, yet no single person can be held accountable for ensuring long-term planning and management of infrastructure. Lots of people are responsible: so many, in fact, that nobody is accountable. CPR identified situations where overlapping responsibilities and duplication of authority has resulted in two state entities spending thousands of legal hours suing one another. The idea of state agencies suing each other is appalling. No matter who wins in court, the taxpayer is certain to lose.
Confronting these challenges head on, the CPR proposal collapses the existing structure into 11 departments aligned along quality-of-life priorities. Each department is given a clear mission and areas of responsibility. Under the CPR model, infrastructure would be consolidated into a single entity led by a secretary directly accountable to the governor. Public Safety would be similarly consolidated, and so on. As the CPR report notes, "If a program is failing Californians, good government demands that blame be easy to affix and hard to deflect."
Accountability II: Justifiable budgets
CPR also proposes fundamental changes in how California government budgets its tax dollars. The process currently could be characterized as "baseline" budgeting: previous years' spending levels are used as the baseline and hence, assumed to be good investments. CPR proposes shifting to "performance-based budgeting" whereby programs are measured each year for what they achieve. That performance information, in turn, informs the level of spending. Under this approach, programs that fail to achieve their goals and, hence, contribute little to the state's quality of life, much like fatty foods and empty calories, can be more easily targeted for elimination or reduction.
Similarly, CPR proposes bringing more accountability to the way the state manages and motivates its public employees. Shockingly, under current practice, more than 99 percent of state employees eligible for consideration for a "merit raise" receive it. Whenever this merit raise is denied (which happens rarely), employees may appeal the decision, which, in most cases, is overturned. State managers complain that it takes as much documentation to deny a merit raise as it does to demote an employee.
In his Encyclopedia, Schwarzenegger emphasizes competition as a powerful force that anyone can use (as he uses on himself) to bring out the very best effort possible. Similarly, in the delivery of public services competition can lead to improved performance and lower costs. The CPR report includes several proposals to do just that. Among them is creation of a Competitive Government Panel to identify opportunities and barriers to competition and then implement and oversee competitive efforts.
The report also recommends ending the monopoly that has been granted to the Prison Industry Authority over state purchases. As it stands, all state agencies are mandated to purchase from the PIA all products that they provide. Waivers to this monopoly are only granted by the PIA themselves and the desire to attain a lower price is not a valid reason for such a waiver. As a result, state agencies overpay for products they could purchase for much less on the competitive market. In a 1993 report, the Little Hoover Commission, the state watchdog agency, declared that the Prison Industry Authority was "holding state departments hostage to high prices and delayed deliveries."
Much like the bodybuilder that gets a better pump and performs better because of competition, state government can pump up by breaking down artificial barriers to competition.
Bodybuilders also routinely try new, innovative workout strategies to build the strongest bodies and target muscle groups in different ways. California needs a similar workout routine that uses new approaches to delivering services to the public. Bodybuilding technology and science has changed dramatically since the days of legendary bodybuilder Bill Pearl. Competitors that relied on the old approaches of the 1950s could not compete in the modern world. The same holds true for government. The world around us has developed while government has changed very little for decades.
For instance, while Californians can renew their vehicle registration online, they are unable to renew driver's licenses that way. As a result, approximately 1 million drivers will stand in line at a DMV field office to renew their drivers' licenses this year. Not only does this add to the expense of the renewal process, it is also a backward model for serving DMV customers: the citizens of the state.
Similarly, CPR proposes a unified connection with the public for state information. Rather than wading through hundreds of toll-free numbers, CPR envisions a single number, a single web portal.
Thirty-four percent of the California state workforce is eligible to retire within the next five years. To help cope with this new reality, CPR recommends leveraging technology and improving customer service as the pool of state workers may decline in coming years.
The Time is Now
For many years, California has lurched from crisis to crisis — electricity, budget, workers' compensation. Sadly, elected leaders have not focused on fundamental state government reforms the past several years, instead doing little more than attempting to put off problems while the state's health has declined steadily.
Seeing this trend, Schwarzenegger embarked on a comprehensive review of state government when he launched the California Performance Review. The report that resulted from that effort now sits on his desk.
In many ways, CPR is like a membership to a gym, complete with a comprehensive nutritional discipline and workout plan. But like all bodybuilding strategies, they only work if you develop the discipline to stick with them.
Now we wait to see if Sacramento has that discipline to reform itself. Even "Girlie Men" couldn't ask for a better trainer.
George Passantino is director of government affairs at Reason Foundation. He served as a director on Gov. Arnold Schwarzenegger's California Performance Review.