In this issue:
- Diabetes in Texas
- Diabetes Dilemma
- New Tax Processing System Debuts
- Technology Touches the 21st Century
- Budgets Bear Up
- More, Better, Faster
- The Road to Reform
- Peak Performance
- Reinventing Government Texas-style
- Bargain Basements
- New!
- Texas Stats -- Fiscal and Economic Data
Diabetes in Texas
Chronic disorder most prevalent in minoritiesDiabetes is a growing problem in Texas. Health officials estimate that about 865,000 Texas adults--almost 7 percent of that population--suffer from this disease, which often goes undetected until expensive and irreversible complications set in.
The Texas Department of Health (TDH) in 1992 estimated the cost of diabetes to be $4 billion--more than $1.6 billion in direct costs to patients and institutions and $2.4 billion in indirect costs due to long-term disability, premature mortality and short-term illness. About $52 million of the cost was paid by state government, including Texas' share of the Medicaid program.
Costly complications of the disease include blindness, kidney failure, amputations, heart disease, strokes and birth defects.
Texas has a number of programs in place to combat diabetes, but the impact of this disease is so large that increased attention, effort and action are needed. In particular, mortality rates for high-risk groups--Latinos, African Americans, females and the elderly--indicate a need for more services targeting those segments of the population.
Starr County in the Lower Rio Grande Valley has a history of high death rates from diabetes. The county population has become the focus of international genetics research and may help further a breakthrough in finding the cause of diabetes.
Texas toll: Diabetes results from deficient insulin secretion, a reduction in the biological effectiveness of insulin, or both. Insulin is a primary metabolic hormone that allows blood sugar to enter body cells and be used for energy.
Type I, insulin-dependent diabetes, occurs most commonly in youngsters but occasionally in adults. These diabetics die unless they receive regular insulin injections to control their blood sugar levels. The milder Type II, non-insulin-dependent forms of diabetes occur mainly in adults but sometimes in younger individuals; more than 90 percent of all U.S. diabetics fall under this classification. Type II diabetes is treated with diet and exercise, as well as a broad spectrum of drugs.
In Texas, diabetes has been diagnosed in 8.3 percent of females and 4.6 percent of males. It strikes about 11 percent of African Americans, 9 percent of Hispanics and 6 percent of Anglos.
In 1994, diabetes killed 4,364 Texans--almost 24 per 100,000 population--making it the sixth leading cause of death, according to TDH. By the end of 1996, the annual death toll is expected to top 5,000, according to Dr. Jaime Davidson, chairman of the Texas Diabetes Council.
Each year, diabetes blinds as many as 2,400 Texans and causes kidney disease for 1,170. It is the cause of more than half of all lower extremity amputations, resulting in $80 million in hospital costs a year. Also, diabetes causes many cardiovascular hospitalizations and deaths and often is associated with kidney failure.
Cardiovascular disease is two to four times more prevalent among diabetics and is present in three-quarters of diabetes-related deaths.
Diabetics run a high risk of stroke, high blood pressure, nerve disease and blindness. Nationally, diabetes is the leading cause of new cases of blindness among adults 20 to 74 years of age. In 1992, about 72,000 Texans were totally disabled and 47,000 partially disabled as a probable result of diabetes, according to TDH.
Anyone older than 30 years of age and overweight is at risk--this group is more likely to develop non-insulin-dependent (Type II) diabetes.
Diabetes disproportionately strikes the elderly. Between ages 65 and 74, the disease is diagnosed in almost 17 percent of Anglos, 25 percent of blacks and 33 percent of Hispanics. The statistics could be much higher, according to experts, as the disease often goes underreported in the elderly because of multiple conditions, such as heart disease or hypertension.
State programs: The state health department houses the Texas Diabetes Council (TDC), the Texas Kidney Health Program, Chronically Ill and Disabled Children's Services, the Adult Health Program and the Primary Health Care Services Program. In addition, the Texas Rehabilitation Commission and the Texas Commission for the Blind provide vocational rehabilitation and independent living services to diabetics.
All of these programs and agencies provide services to diabetics. Many other entities provide medical services: public hospitals, county indigent health care programs, community health centers, nursing homes and university health clinics.
TDH works with the federal Centers for Disease Control and Prevention, which provided $217,200 in 1994 to develop new approaches to reduce the extensive burden of diabetes and promote the widespread use of accepted standards of treatment.
South Texas has the first extensive Type II diabetes registry in the nation. The University of Texas System Texas-Mexico Border Health Coordination Office is housed at the UT-Pan American in Edinburg. The registry, created in 1995, maintains a list of physicians, community health clinics, hospitals and other health care providers and keeps track of diabetics living in the Rio Grande Valley. School districts in four counties have enrolled 20,000 fourth graders. These children receive information on diabetes and may enroll their family members in the registry.
Also, the UT Health Science Center in San Antonio is building a $22 million disease research center to study diabetes and other diseases common to South Texas. The Texas Diabetes Institute, due to open in fall 1997, is a collaborative effort between the University Health System (formerly the Bexar County Hospital District) and the UT Health Science Center to provide medical care, patient and professional education and clinical research. The institute also is working on partnerships with private health care systems and businesses to improve diabetes services and prevention intervention to avoid a diabetes-related cycle of illness.
TDC funds programs that focus on treatable cases in which early intervention is critical to manage the disease. The program seeks to link patients with community resources, and it has been a model for working with managed care organizations setting up minimum standards of care.
Community-based programs target services to high-risk groups. The council has identified 12 areas with a high incidence of non-insulin-dependent diabetes among blacks and Hispanics: Alpine, Austin, Dallas, El Paso, Houston, Laredo, Pharr, Port Arthur, San Antonio, Sweetwater, Tyler and Wichita Falls.
TDC also sponsors the diabetic eye disease program that serves Uvalde, McAllen, Houston and Dallas. TDC has provided intervention grants at projects in El Paso, Tyler and San Antonio to provide patient education, nutrition management and control of hypertension and other complications.
Together, Baylor College of Medicine and the Harris County Hospital District have lowered the onset of blindness among diabetics in the Houston area from 9.5 per 1,000 patients in 1965 to no new reported cases in 1993.
TDC distributes educational packets in English and Spanish on treatment, nutrition and lifestyle expectations for diabetics. A toll-free bilingual hotline, sponsored by the American Diabetes Association, is available to answer questions at 1-800-DIABETES.
Border studies: Because diabetes has long been a problem in Starr County, the predominantly Hispanic population has been the subject of genetic and epidemiological research since the 1970s. More than half of the residents over age 35 have diabetes or have close relatives who do.
A multinational team of researchers from the U.S., Japan and Germany working with the UT Health Science Center at Houston has achieved a crucial first step in finding the gene responsible for non-insulin-dependent diabetes. The team of researchers traveled to Starr County and analyzed genetic samples from 330 Mexican-American adult pairs of siblings, all with Type II diabetes.
The scientists now believe the disease results from the action of at least one major susceptibility gene. By narrowing the location of this gene, they have the first evidence that a gene will confer risk. Once they have isolated the gene, scientists say they can determine how it interacts with environmental factors and get vital insights into the cause of the disease and its complications. They might even learn new ways to diagnose and treat the disorder.
Hard-line approach: Most experts agree that only about half of all diabetes cases are being diagnosed, meaning that another 865,000 Texans or so could have the disease and not know it.
Finding and treating all cases is important, not only for the welfare of the individuals and their families but because diabetes takes such a toll on the economy. Long-term disabilities attributed to diabetes were estimated to cost $1.4 billion in 1992.
Preventing serious complications, such as blindness, gangrene or cardiovascular disease, depends on diabetics seeing a physician regularly and keeping a daily regime, be it insulin injections (Type I), diet, exercise, or care of lower extremities and eyes.
It is more cost-effective and better for diabetics to receive education, medication and treatment than to have to deal with complications. Intervention and behavior modification are key to preventing this chronic disease.
Contributing to this article:
Mario Salinas and Marjorie HersheyFrom the Comptroller:
Diabetes DilemmaAs state Comptroller, it's my job to monitor trends that could affect the economy, including anything that hinders Texans from being as productive as possible. That's why the growing incidence of diabetes worries me so. This chronic disease affects hundreds of thousands of Texans, often causing incapacitating complications, even death. Disability due to diabetes costs Texans more than a billion dollars a year in lost wages.
Many of the debilitating consequences could be avoided, or at least minimized, if more education about testing and treatment were available.
With Type I, or juvenile diabetes, it's been shown that daily medication and proper monitoring can help an individual lead a vigorous life. With Type II diabetes, the kind usually not diagnosed until middle age, the disease can be well managed with a daily routine of exercise, proper nutrition and weight management.
Yet the number of cases continues to climb, especially in minority communities. About half of the residents of Starr County in South Texas have diabetes or are related to someone who does. Hispanic and black families are all too familiar with this debilitating disease. And scientists estimate only half of all diabetics have been diagnosed.
What we need is community-based education to help people understand the benefits of early diagnosis, eating right and exercising. Knowledge of the symptoms could lead people and their children to visit their doctor and receive prompt treatment.
As a society, we are too sedentary. Texans need to be reminded of the importance of choosing a balanced diet and active lifestyle. In the long run, these are the best preventatives for a disease that costs so much in human productivity.
-John Sharp
New Tax Processing System Debuts
An overhaul of the Comptroller's tax and fee administration system will bring about improved service for Texas taxpayers, higher tax revenue collections, lower administrative costs and the flexibility to accommodate changes in taxes and fees.
The first phase of the Comptroller's Integrated Tax System (ITS), implemented in September, improves administration of the state sales tax and the interstate motor carrier tax. This enables tax specialists who work directly with the public to update account information and answer taxpayers' questions more efficiently.
When ITS is fully in place, a Comptroller tax specialist will be able to work with all taxes owed by a taxpayer without transferring the taxpayer to another specialist. New features include an immediate, on-line update of account changes and automated estimation of taxes owed by a non-filer, based on the taxpayer's history. The non-filer will be billed according to this estimate.
With any future legislative modifications to the state's tax and fee structure, Comptroller specialists will be able to update all tax systems at once rather than factoring the changes into each individual system. This allows the tax specialist to interpret rules and calculations more consistently across all tax lines.
In 1997, a new taxpayer registration section of ITS will eliminate duplication of information for more than one tax record. Now a taxpayer must enter common information on each tax form because the different systems don't share taxpayer records. ITS will eliminate this redundancy.
Eventually, taxpayers who pay multiple taxes and fees will receive a single bill, and will be able to make changes to all their accounts with one phone call.
Technology Touches the 21st Century
The Comptroller's Office will sponsor a state policy analysis conference on Wednesday, November 20, at the LBJ School of Public Affairs. The one-day conference, which will focus on technology issues facing the Texas Legislature, will feature experts on the topics of integrated enrollment, the "Year 2000" computer problem, neural networks, electronic benefits transfer, telemedicine, the Internet, electronic currency, education, telecommunications and utility deregulation. Admission is $25 per person. For more information, call 1-800-279-1678.
Budgets Bear Up
State's year-end balances the best in 10 yearsFor the first time in a decade, more states cut taxes than raised them in fiscal 1995. General fund collections exceeded revenue estimates in nearly every state. The outbreak of positive cash balances reflects several years of strong economic growth and forecasts of continued growth throughout most parts of the nation.
According the National Conference of State Legislatures (NCSL), net tax reductions--primarily in the personal income tax--totaled $1.2 billion in 1995. This pattern is expected to continue in 1996. If so, the back-to-back tax cuts would be the first nationwide since 1978 and 1979.
Tally up: By the end of fiscal 1995, states had accumulated $17.5 billion in general revenue and reserve (rainy day) funds--5.1 percent of general fund expenditures--which represented the greatest share of general fund expenditures in 11 years.
Total state expenditures reached a record-high $721 billion in 1995, according to the National Association of State Budget Officers (NASBO). State spending drawn from federal funds slipped from 27 percent in 1994 to 26.7 percent, reflecting the anticipated decline in federal aid to states.
Balanced financial ledgers come as a relief for states that were embattled by economic downturns. Recessions in the 1980s and early 1990s kept budget balances low and generated deficits in several states.
Texas suffered a well-publicized recession in the mid-1980s on the heels of energy and real estate busts. California's economic jolt hit several years later when the state suffered deep cuts in aerospace, military and construction jobs.
On average, the collective financial outlook for states began to turn around about four years ago. By 1995, job growth, budget surpluses and positive economic forecasts framed the fiscal environment for most states. Many legislatures adopted personal and business tax cuts, according to NCSL.
Down home: Texas ended fiscal 1995 with a cash balance of $4.2 billion in general and special revenue funds, which were appropriated for the 1996-97 biennium to finance general operations, capital projects and debt service. Net revenue for these funds rose by about $2 billion, or 5.4 percent, over the previous year. Tax revenue rose $753 million, or 4.2 percent; revenue from licenses, fees and permits rose $617 million, or 19.6 percent.
The state sales tax, which brings in more than half of the state's tax collections, raised $10.3 billion in 1995, while lottery proceeds totaled $1.7 billion.
On the spending side of the ledger, state expenditures increased by almost $3.7 billion, or 10.4 percent, over 1994 spending. This growth came about primarily because of increased health and human services expenditures mandated by the federal government and an increase in education and corrections spending.
The 1995 Legislature adopted $1.5 billion in recommended savings from Comptroller Sharp's Texas Performance Review, helping to avoid any significant tax increase for the 1996-97 biennium. Among the TPR recommendations signed into law were revamping workforce development and job training programs, limiting growth of state government employment and eliminating the State Treasurer's office. While both the Texas and U.S. economies slowed slightly in 1995, Texas' economic growth has remained somewhat above U.S. growth since 1990.
In 1995, Texas businesses added more than 300,000 jobs, maintaining the lead position among the states for the fifth consecutive year in new jobs added. Texas ranked 10th in the rate of employment growth, primarily due to continued relocation of high-tech companies to the state and a relatively robust construction industry.
Budget exercises: Strong fiscal conditions are the general rule, but economic growth remains slow in some states. For example, Maine, Vermont and Louisiana began 1996 with challenging budget situations.
Vermont was one of three states (in addition to Hawaii and South Dakota) to enact a significant tax increase in 1995; subsequently the state was forced to trim spending early in fiscal 1996 because revenue collections were lower than projected. In Louisiana, a public health finance shortfall required transferring more than $500 million in general revenue to the Medicaid budget. Maine was looking at personnel reductions due to a $45 million shortfall, but a shrinking Medicaid caseload freed up enough state funds to fill in the gap.
By the end of fiscal 1996, 14 states expect general fund collections to be more than 1 percent above target, according to a spring 1996 survey by NCSL. On the other hand, five states project revenue shortfalls of more than 1 percent. The remaining states, including Texas, were expected to wind up fiscal 1996 with collections at or near budget.
Spending is in line with the original budgets in 30 states. The remainder of states had to make spending adjustments in one or more of these areas: education, corrections, welfare and Medicaid.
Medicaid has surpassed higher education as the second-largest spending category for states, according to NASBO.
Nationwide, Medicaid is consuming about 19 percent of states' general funds. Trying to satisfy Medicaid demands has put pressure on states, including Texas, to transfer funds from other categories, raise tax collections or cut services.
A look ahead: State legislatures approach 1997-1998 budget planning with the realization they stand to lose $55 billion in federal funds for the needy over the next six years. Congress could enact further changes in Medicaid policy, as well as in federal grants for welfare, education, job training programs and health care.
"The shifting of funding and responsibilities between states and the federal government has the potential to be of historic proportions," states NASBO's 1995 State Expenditure Report. "However, it is impossible to predict how the various proposals will fare."
While waiting to see how much money they will receive and how they are permitted to use it, 11 states have appointed task forces, commissions or interim committees to monitor congressional action.
Other states are doing more, according to NCSL. Nebraska is restructuring its health and human services agencies. New Jersey has sold its state-operated health maintenance organization to the private sector. Ohio has created a special fund to address federal budget changes.
States will have to make tough choices on whether to maintain programs for the needy in their current form or reduce eligibility and benefits. Indications are that these issues will top the list of budget concerns for state legislatures in the coming year.
Contributing to this article:
Julie CrimminsMore, Better, Faster
Innovative states turn to performance reviews
to improve operations, tighten spendingEfficiency, effectiveness and accountability in government have become the measuring sticks for public expectations. Many states are turning to performance reviews and government reorganization to improve services to the public and to lower costs.
Some reforms, like many of those already achieved in Texas, involve restructuring agencies or programs to eliminate duplication. Consolidating and abolishing boards, commissions and agencies are other means being used to realign government. And privatization has become a viable way for states to do more with less. Some of the most comprehensive initiatives are taking place in Florida, Oklahoma, California, Massachusetts, Wisconsin and Kentucky.
Sunshine State reforms: Streamlining state agencies is one of the focal points of the five-year-old reform effort in Florida, including eliminating employee positions and merging agencies. Since 1991, state agencies have cut 3,000 positions and captured almost $500 million in savings from areas such as technology, employee bonuses, training, temporary staffing and research projects.
The legislature has merged the Department of General Services and the Department of Administration, and paired the Department of Environmental Regulation with the Department of Natural Resources.
In 1992, the state began a reorganization of the Department of Health and Rehabilitative Services, a 40,000-employee agency with a $10 billion budget that had become the largest in the country. Much of the agency's authority was shifted to the local level, and new districts were organized in high-growth areas.
The state is reviewing 30,000 state administrative rules with the intent of eliminating those that are outdated, overlapping or duplicative. Some agencies report they could trim 30 percent of their existing rules.
Competition, OK: Based in part on the Texas model, the Oklahoma Commission on Government Performance proposed using performance-based budgeting, integrating related health and human services into one location and creating a council for competitive government.
After reviewing state services, the 50-member commission issued a report in late 1995 that contained more than 300 recommendations and as much as $500 million in savings per year, if adopted in full.
The report said common-sense business practices could alleviate duplication, excessive regulation, a lack of accountability and "downright waste." A task force, formed to study consolidating the energy-related functions of several state agencies, will make recommendations by early 1997.
Improvement movement: California's performance review culminated in April 1996 with a proposal to overhaul state government. The proposal focuses on streamlining state government bureaucracy and rewarding merit in the state work force.
Suggesting that "it shouldn't take an earthquake to shake up state government," Governor Pete Wilson proposed abolishing hundreds of boards and commissions, privatizing the $7.3 billion State Compensation Fund and consolidating licensing functions, financing authorities and departments in state agencies.
By inviting private and public competition to provide many state services, California could save more than $19 million over five years. Some of the services suggested to be put up for bid include fine collections, loan servicing, data entry, microfiche storage, prison construction and professional (real estate, plumbers, etc.) license testing.
The report recommended selling surplus state assets, doing away with more than 4,000 outdated state regulations and modifying another 1,700, as well as enacting a constitutional cap on the overall cost of regulation. So far, 3,100 state regulations have been eliminated.
Other proposals are to reform the state's personnel system by removing barriers to attracting the most qualified employees, streamlining disciplinary procedures and improving training.
Some recommendations have been implemented already. The state's Department of Transportation, for example, will contract with private engineering firms for $120 million in services to strengthen more than 1,000 bridges. Also, the state sold 135 acres of surplus land in San Jose for $85 million.
Accountability test: Massachusetts is trying to end agency fragmentation--overlapping and duplicative processes--as part of its approach to state reforms. The goal is to realign government services by establishing one point of accountability and responsibility for similar functions.
In early 1996, the legislature eliminated five state agencies, including the departments of labor, education and economic affairs, and it abolished more than 100 boards and commissions.
However, some reforms such as dismantling the health and human services agency and abolishing or consolidating various licensing agencies, were rejected by the legislature in March 1996.
Lone Star influence: Wisconsin and Kentucky have used creative measures to tackle the challenge of government reform.
The Wisconsin Commission for the Study of Administrative Value and Efficiency (SAVE) issued broad recommendations in 1995, many of which resemble Texas' reform measures. Proposals include eliminating the offices of secretary of state and state treasurer, consolidating employment and training programs, rewarding employees and agencies for money savings and adopting a strategy-driven budget process. Other recommendations include consolidating parks and tourism functions, alcohol and drug abuse programs and aging functions, eliminating the Public Lands Commission, and selling some state facilities.
In Kentucky, a new program has been designed to reconstruct state government through technology, emulating private sector techniques, new communications systems and employee training.
The Kentucky Legislature set aside $103 million to redesign some of the processes through which government services are delivered, ranging from security at state buildings to an information infrastructure that promotes resource sharing and avoids duplication. By December 1996, the Empower Kentucky program should have eight to ten of these processes redesigned and ready for implementation, according to the governor's office.
Contributing to this article:
Julie Crimmins
The Road to Reform
With just a six-year track record, Comptroller John Sharp's Texas Performance Review (TPR) has spurred legislation that has saved Texas taxpayers almost $8 billion.
Soon, a fourth biennial report of legislative recommendations will be released, containing proposals for further savings and efficiencies.
TPR was born of economic necessity. Facing a potential budget shortfall of $4.6 billion in 1991, the Texas Legislature authorized a comprehensive review of state spending and budgetary procedures. The Comptroller's Office was designated the lead state agency.
TPR was directed to challenge the basic assumptions about how government works. The mission was to look for ways to increase the effectiveness and efficiency of government, while cutting its cost.
Gold Card: One of the most innovative and successful reforms was the adoption of electronic benefits technology (EBT) to replace paper food stamp coupons. The Lone Star Card, now in use statewide, has substantially reduced the fraud and abuse that was rampant with the paper-based system.
The card is expected to yield state and federal savings of $126 million by 2001. Texas leads the nation in reducing food stamp rolls--300,000 recipients have been dropped from the Texas rolls due to an improved economy and EBT. Some of those people had received food stamps at two or three different addresses.
Another TPR-inspired idea is the Texas Tomorrow Fund, a prepaid tuition plan that allows Texas families to lock in the cost of their children's college education at today's prices. The program allows families to prepay both tuition and required fees at Texas public colleges and universities and at private colleges in the state.
The program's 1996 debut saw more than 41,000 Texans sign up children for the plan during the first enrollment period. A second enrollment period begins November 18. TPR recommendations also have led to the streamlining and consolidation of some state agencies. An effort to restructure the state's workforce development and job training system culminated with the creation of the Texas Workforce Commission to replace the Texas Employment Commission and consolidate 28 training programs previously operated by 10 state agencies.
Another TPR recommendation led to the elimination of the State Treasury Department, an agency with an annual budget of $11 million. The major functions of the agency have been moved to the Comptroller's Office. The merger is expected to save the state more than $20 million by 2000.
TPR also led to the consolidation of the Texas Air Control Board and the Texas Water Commission, creating the Texas Natural Resource Conservation Commission (TNRCC). TNRCC has improved permit application turnaround time and increased enforcement and penalties for environmental violations.
The Council on Competitive Government, established in 1993, has brought competition and the best practices of the private sector into the process of contracting for state goods and services. By doing so, the state has saved a total of $18 million.
Back to work: The success of TPR has not gone unnoticed. Vice President Al Gore patterned the 1993 National Performance Review after TPR and enlisted Comptroller Sharp as a special advisor. The national review is expected to save $70 billion by 2000.
Other states have followed Texas' lead by initiating performance reviews of their own. California, Illinois, Kentucky and Oklahoma have all sought TPR's advice in setting up performance reviews, as have the nations of Argentina, Latvia and Kyrgyzstan.
The success of the government-wide performance review has inspired smaller-scale efforts as well. At the request of legislators, TPR has conducted in-depth reviews of the Texas Department of Mental Health and Mental Retardation and the state School for the Deaf.
In a related function, the Comptroller's Office completed 21 school district performance reviews from 1991 to mid-1996, recommending a total of almost $200 million in savings. About 87 percent of the recommendations have been implemented by districts, with actual savings of almost $40 million so far. A report on the Houston Independent School District recommending more than $80 million in savings was released in October.
Peak Performance
Biennial budget based on measurable goalsIn 1992, Texas became the first state to adopt a performance-based budgeting system.
For the previous 20 years, the Legislature had used a form of zero-based budgeting. Every two years, state agencies would submit budget requests at various funding levels, ranging from bare-bones to "ideal." This told lawmakers what programs and services would have to be curtailed or eliminated if agency budgets were cut by varying degrees.
Performance-based budgeting picks up where zero-based budgeting left off, focusing not only on how each state agency spent its allotted funds but whether the agency reached its goals. The 1994-95 biennial state budget was the first based on this method.
Performance-based budgeting provides agencies with a clear sense of what the Legislature expects to be accomplished, and it underscores which programs and services are considered most important. At the same time, state agencies get the flexibility to meet their goals without having their budgets micromanaged by the Legislature. For example, budget writers are more likely to scrutinize what percentage of qualified Texans received services from a state agency rather than how much the agency budgeted for paper.
The Legislative Budget Board (LBB) sets out 3,200 targets for agency performance. The targets are broken down into about 10,000 performance measures, about a third of which are legal requirements.
The task of determining which measures most accurately gauge agency performance is ongoing. The State Auditor's Office reports that about half of the state's performance measures are considered reliable. Agencies are working to develop more accurate criteria for the remainder.
Overall, the performance measures reflect the mission of each state agency, college and judicial district, all of which report the results of performance budgeting efforts to the LBB.
For example, the Comptroller's Office, one of the largest state agencies, met or exceeded 73 percent of its performance targets, according to the LBB's Summary Assessment of Agency Performance. In fiscal 1995, taxpayer accuracy on audits and taxpayer satisfaction with Comptroller services exceeded targeted performance levels, and both improved over 1994 levels. Tax auditing resulted in a return of $11.80 for each dollar spent conducting audits.
Another large agency, the Department of Human Services (DHS), met or exceeded 46 percent of its performance targets. The State Auditor's Office certified the accuracy of 10 of the agency's performance measures and found insufficient documentation for three others. The agency exceeded targeted goals for providing child care services for low-income families, but was hampered in meeting some performance goals due to the improving economy, as demands for Medicaid entitlement services dropped and enforcement efforts improved.
The Department on Aging, one of the state's smallest agencies, met or exceeded 58 percent of its performance targets for the biennium. The agency increased its spending for home-delivered meals from 45 percent of its expenditures in 1994 to 50 percent in 1995 to better meet the needs of its elderly client base. The LBB offers suggestions to individual agencies on how performance measures can be made more accurate and which areas need improvement.
Process evolves: The last few years have been groundbreaking as the state's budget writers shifted their focus from individual spending items to overall agency performance. There have been problems with the new system. But future efforts should yield even more accurate performance goals and measures, now that state agencies have the benefit of hindsight and can draw on their experience with the new system.
Many agencies have suggested new, more accurate measures to be used as the LBB prepares for the legislative session in January 1997.
Contributing to this article:
Greg Mt.JoyReinventing Government, Texas-style
Guest column by former State Senator John T. MontfordLike the hurricane that begins as a breeze, the process of innovation or reinvention starts with small, often imperceptible steps that provide the impetus for significant change.
In recent years, there has been a movement afoot known as reinventing government, a description many skeptics view as an oxymoron.
When reviewing attempts to reinvent Texas state government, it's tempting to measure such changes in "geologic" time, but we shouldn't sell ourselves short. The changes under way--while small--are steps forward that, like geologic change, have the potential to leave behind radical transformations.
Key to that reinvention process, which itself is only a few years old, has been the Texas Performance Review (TPR) headed by Comptroller Sharp. TPR has become an integral component in stretching scarce resources and delivering state services with a better focus on the needs of the client and the will of the taxpayer.
TPR came to life in 1991 at the outset of the legislative session. John Sharp's first official action as state comptroller was to announce that projected revenue for the next biennium was billions of dollars short of what was necessary to fund the state's spending needs. Having just been appointed chairman of the Senate Finance Committee by Lieutenant Governor Bob Bullock, I realized that I had indeed drawn the black bean.
Fortunately, the lieutenant governor did not leave me out on the limb, but set in motion the idea for a complete review of Texas government: an agency-by-agency audit to prioritize the state's budget needs and find more efficient ways of delivering services. In Bullock's words: "Texas must shake state government upside down to find out what is important for us to have and what we can do without." The situation was too dire to simply pay lip service to the idea. We had to make a serious effort to find better ways to improve government performance and save money.
At the Legislature's behest, Comptroller Sharp assembled a team of more than 100 analysts from 16 state agencies and the private sector to review budgets, interview agency staff and brainstorm ways to improve government.
We hoped that as much as $500 million in savings would be achieved.
The Comptroller's team went further. The final report, Breaking the Mold, identified 975 recommendations with an estimated savings of $5 billion-plus. The Legislature approved two-thirds of the recommendations, realizing $2.4 billion in savings or revenue gains for the 1992-93 budget period. It was also agreed that TPR would become an ongoing function of the Comptroller's Office.
Since then, state lawmakers continue to depend on TPR. Through 1995, the Legislature had adopted hundreds of the Comptroller's recommendations, resulting in nearly $8 billion in total savings or revenue gains. In addition, other states have followed Texas' lead by starting their own performance review programs, and the National Performance Review was initiated by President Clinton.
This fall, the offices of the governor and the Legislative Budget Board are scrutinizing biennial spending proposals in preparation for the legislative session that starts in January. They expect that the state's steady economic growth will provide revenue sufficient to cover about half of the new state spending needs, such as enrollment growth and equalization costs in public education, operating costs for new prison and juvenile facilities, and compliance with various federal mandates, primarily in health and human service programs.
Once again, the Legislature will look to TPR as part of the solution. But TPR serves another, more important function, because it represents an internalized process for setting the agenda for reinventing government. That's not to say that every TPR recommendation is necessarily the best solution--it doesn't have to be. We need people in state government who challenge assumptions and play the "devil's advocate." Then it's up to the governor and the Legislature to determine what is best for Texas.
Although the pace of reinventing government may be slower than desired, we should not lose sight of the importance of maintaining the momentum of change and taking those critical steps. That is TPR's role.
Editor's note: In August, Montford resigned his state Senate post to become the first chancellor of Texas Tech University. He had served in the Texas Senate since 1983.
Bargain Basements
From trade shows to flea markets, taxes are due on retail salesTax enforcement officers with the Texas Comptroller's Office are typically associated with issuing sales tax permits to new businesses or collecting delinquent tax returns on the state's major taxes. So it often comes as a surprise when these officers show up at weekend gun-and-knife shows, even flea markets, but it is their job is to ensure that vendors have permits to sell.
The state sales tax is due on all retail sales of new or used tangible personal property. Anyone selling more than three taxable items within a year must have a state tax permit to sell, whether it's J.C. Penney or a hobbyist hawking beaded necklaces on the street corner. Operating without a valid permit is a misdemeanor; violators may be fined up to $500 a day.
A taxing situation: Trade shows, which sell items from electronics to jewelry, are canvassed regularly by the Comptroller's Office. Typically, enforcement officers check out at least one trade show in each enforcement district every three months to verify that vendors have permits.
Enforcement officers may appear unannounced but will identify themselves to the promoter of the show. Usually, they will try to canvass the tables as early as possible to keep from disrupting the event.
At the 1995 State Fair in Dallas, enforcement officers not only conducted booth-to-booth canvassing for permits, but rented office space to provide on-site service to taxpayers, such as issuing sales tax permits, filing returns and answering questions. Between September and December of 1995, Comptroller enforcement officers canvassed 24 gun-and-knife shows around the state, contacting about 1,900 exhibitors. The officers found a 90 percent compliance rate and required those without permits to obtain them. The Houston gun-and-knife show in November 1995 was the largest of the year. Officers spent an entire day at the Astrohall canvassing 560 exhibitors, some of whom had multiple tables.
"First Saturday," a Dallas event held the first Saturday of every month, began as a small flea market 30 years ago and has grown to 300 to 500 vendors offering a variety of goods--new and used--for sale. This and other flea markets across the state are canvassed, sometimes on multiple occasions, to make sure all vendors are informed of their state tax responsibilities.
The Comptroller's Office defines a flea market as "a business location that normally rents space to vendors who sell, buy or trade new or used items such as furniture, clothing, antiques, collectibles, tools, toys, appliances or automotive parts and accessories." Such events are not exempt from state laws requiring each vendor or promoter to obtain a sales tax permit.
Promoters can be held liable for the taxes due from all the flea market sales by vendors who do not hold active sales tax permits. In some cases, the promoter will handle all sales transactions, deduct the tax and return the rest to the vendor. Usually, the vendor is accountable for sending in sales tax.
As an incentive for reporting on time, state law allows the person filing the report to keep one-half of 1 percent of the amount of tax collected.
Enforcement officers work with flea market promoters to ensure that vendors understand state tax laws. As with trade shows, the officers canvass vendors one by one to ensure that they have permits and a record of their sales. For vendors lacking permits, the enforcement officer will provide sales tax permit applications and assist with completion of the forms.