Magazine May 2019

Governing Transformation

transformation

by Dan McFadden, APR | Photo by Jamison Mosely

If over the past year you walked the halls of any Arkansas government agency, read a recent report in Arkansas Money & Politics or watched or heard a local newscast, chances are you heard about Gov. Asa Hutchinson’s government transformation plan. Now that the Transformation and Efficiencies bill has been signed into law, there are many questions about how the plan will benefit Arkansans.

Change is a constant, especially in Arkansas government. Cabinet-level state agencies have increased their ranks by 29 over the past 48 years – a growth rate of 1.66 agencies per year.

On October 3, 2018, Hutchinson announced plans for a major reorganization of state government. The plan would reduce cabinet-level agencies from 42 to 15. 

“This long-overdue and comprehensive reorganization effort will realign agencies to reflect a more modern and efficient way to operate state government without cutting any services,” explained the governor. 

For those who have been around Arkansas 60 years or longer, it is not déjà vu you’re experiencing. While 42 agencies sound like a daunting figure, a former governor addressed the same issue 48 years ago with 60 agencies.

A TALE OF TWO GOVERNORS

Flashback to 1971: newly-elected Gov. Dale Bumpers picked up and ran with the government reform torch first lit by his predecessor, Gov. Winthrop Rockefeller. According to the Central Arkansas Library System’s Encyclopedia of Arkansas History and Culture, it was under Bumpers’ leadership that Act 38 of 1971 was signed into law. This transformational reform was responsible for condensing state government from 60 to 13 agencies. The 1971 reorganized departments included:

• Commerce

• Correction

• Education

• Finance and Administration

• Health

• Higher Education

• Industrial Development

• Labor

• Parks and Tourism

• Planning

• Pollution Control and Ecology

• Public Safety

• Social and Rehabilitative Services

Fast forward to 2015. Shortly after Hutchinson took office, some early signs of government transformation began: the Department of Rural Services merged into Arkansas Economic Development Commission (AEDC), the Scholarship Lottery merged into the Department of Finance and Administration (DFA), both in 2015; and the Energy Office merged into Arkansas Department of Environmental Quality (ADEQ), with the Embalmers Board, Funeral Directors Board, Cemetery Board, and Burial Association Board into the Arkansas Insurance Department (AID), both in 2017.

Time does have a way of repeating itself in Arkansas. According to Amy Fecher, the state’s chief transformation officer, the similarities between the government transformation challenges faced by Hutchinson and the late Bumpers are striking. “Gov. Bumpers’ two main issues during the 1971 session were taxes and government reorganization, so it’s kind of ironic how things cycle around from 1971 to 2019,” she says. “Gov. Hutchinson recognized immediately when he came into office that the state needed reorganization now just as much as when Gov. Bumpers tackled the issues.”

Transformational Savings and Efficiencies

Fecher says a newer, leaner model of state government at the cabinet level “will break down silos of bureaucracy that have existed in state government for years and result in a better product for users in the state.” 

“In the nearly 50 years since Arkansas’s last comprehensive reorganization effort, state government has grown larger and more inefficient,” Hutchinson says. “Arkansas currently has more than 40 cabinet-level agencies; by contrast, the federal government has only 15. Since before I became governor, I recognized that changes were needed to make government manageable, improve services, increase efficiencies, and save taxpayer dollars.”

Hutchinson says transformation efforts produced savings by combining some services and through simple changes, such as combining office space. Adding to the momentum, state payroll has been reduced by 1,500 employees through natural attrition. Fecher points out the governor has stated no state employee will lose a job as a result of the transformation.

The mergers will strengthen affected agencies “by providing more resources while at the same time eliminating duplicative processes,” according to the October 3, 2019 news release announcing the government transformation plan. One example is moving the Arkansas Natural Resources Commission (ANRC) under the Arkansas Agriculture Department (AAD). Under the Transformation and Efficiencies Act of 2019 more than 200 boards and commissions will be assigned to a larger umbrella department.

When it comes to actual taxpayer savings, only time will tell. 

“It’s too soon to put a figure on it, but based on the first four years of my administration, I am confident that our thoughtful and experience-based transformation plan will dramatically reduce our spending and improve our service to the taxpayers,” the governor said.

There are government transformation savings visible today from the governor’s first term. “Since the 2015 merger of Arkansas Science and Technology and Rural Development with AEDC, we have given back over $5 million in general revenue to the state,” Fecher says. As state chief transformation officer, she divided her time during the merger as AEDC deputy director. Fecher added that additional savings were incurred by consolidating locations and eliminating office leases, once expired.

And Then There Were 15

Sixteen house bills embodied the government transformation plan. The primary HB1070 read, “To create the Transformation and Efficiencies Act of 2019; to establish cabinet-level departments; to transfer state entities; and to declare an emergency.” Rep. Andy Davis of Little Rock sponsored and filed all bills to the Arkansas Assembly, one for each of the 15 proposed cabinet-level departments:

• Veteran Affairs

• Health

• Corrections

• Inspector General

• Agriculture

• Parks, Heritage, and Tourism

• Military

• Human Services

• Energy and Environment

• Public Safety

• Transformation and Shared Services

• Labor and Licensing

• Finance and Administration

• Education

• Commerce

One of the cornerstones of government transformation will be a model not unfamiliar to the private sector: shared services. The new Department of Transformation and Shared Services will focus on the implementation of the legislation, as well as how the shared services model for internal operations can save money over time, support each agency, and make it a more efficient process. Services will include personnel management, procurement, employee benefits, building authority, information systems and geographic information systems.

“When you look at how businesses in the private sector operate, they’re constantly having to innovate, transform, and generate efficiency,” says Speaker of the House Matthew Shepherd of El Dorado. “At the state government level, we’ve certainly not had a comprehensive effort to do that. The shared services approach allows us to do some of the things that you might see in private business to really make sure we are getting as much as we can out of state government.”

Shepherd, a long-time advocate for state government efficiency, has served on the governor’s Transformation Advisory Board since 2017. The 16-person board was comprised of a voluntary group of citizens from public and private sectors and charged with making policy recommendations to the governor and chief transformation officer. The process of transformation has been deliberate, thoughtful, and thorough. 

“The advisory board heard from the different state agencies and departments and made recommendations to the governor’s office,” Shepherd said. “The governor finalized his plans, then Rep. Davis sponsored the legislation.” 

Persistence and Diligence

Davis says his role over the past two years is best described as one of persistence and diligence. 

“It has taken an immense amount of time to go through the process. We (the advisory board) formulated and debated outside the legislature and then, beginning last fall, began drafting bills and discussing between the legislative and executive branches how the cabinets are going to be structured.” 

According to Davis, individual bills were filed to maximize the time the public, agencies, and legislators had to review for each cabinet leading to one final omnibus bill.

The governor was engaged with legislative leadership throughout the process, which, according to Shepherd, provided ample opportunity for legislators to give feedback and talk through any issues or concerns.

“I have met with a number of legislators throughout this process to listen to their thoughts on the legislation and to share why I believe now is the time to transform state government,” Hutchinson said. “It has been a time-consuming process, and I appreciate all members for the time they have invested in their review. Their diligent work has made this legislation even stronger.”

On April 11, 2019, Hutchinson signed the Transformation and Efficiencies Act of 2019. 

“This is a significant accomplishment that sets Arkansas on the right course to better serve her citizens,” the governor said. 

Hutchinson also announced the formation of the Transformation Transition Team, a 16-person team of state employees who will assist with implementation of the 2019 Act. The governor will appoint a secretary to lead each of the 15 cabinet-level departments, all in place by July 1, the beginning of the state’s new fiscal year.

A transformed Arkansas government is ready to take flight, promising savings, efficiencies, and a shared services model.

“A lot of people asked me, ‘Are you excited that transformation is almost over?,’ and I kind of chuckle because transformation is just beginning,” Fecher said. “Now with the Transformation and Efficiencies Act of 2019 signed into law, implementing it, and really doing the work or finding the savings and bringing agencies together, that’s when you’ll see the real transformation.”

To learn more about the new cabinet-level departments, view the Arkansas Executive Branch master organizational chart at https://governor.arkansas.gov/images/uploads/190403_Governor_Hutchinsons_Final_Proposed_Transformation_Org_Chart.pdf. 

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