John Walters is a political columnist for VTDigger. He also contributes to our daily Statehouse newsletter, Final Reading. Subscribe here.
In his three-plus years in office, Republican Gov. Phil Scott appears to have learned a tough lesson: Achieving efficiency in state government is a slow, difficult slog, not a quick, painless way to cut spending.
As a candidate for governor in 2016, Scott often touted “lean management” as a way to cut the cost of government. “I believe we can reduce the operational cost of every agency and department by one cent for every dollar currently spent, in my first year in office,” Scott said on Sept. 1, 2016. “Saving one penny on the dollar generates about $55 million in savings.”
Scott even came up with a catchy acronym for his plan: PIVOT, or “Program to Improve Vermont Outcomes Together.”
Actual savings have been difficult to come by. Scott’s 2021 budget includes $13 million in projected efficiencies, much of which has nothing to do with PIVOT. For example, $3.5 million of that figure would come from the closure of the Woodside Juvenile Rehabilitation Center. That’s a policy decision, not an outcome of lean management.
This is not to say that Scott’s initiative has been a failure. It simply reflects the difference between a candidate’s rhetoric and the reality of actually managing a complex organization. And Scott, to his credit, no longer talks about cost savings. Instead, he talks of making government work more effectively with the same resources.
“It’s not necessarily about savings, it’s about maybe spending the same amount of money and providing better value,” said Finance Commissioner Adam Greshin. He cited the Tax Department’s Renter Rebate Program, which provides refunds to those whose rent payments exceed a certain percentage of their income. “It’s worthwhile, but it’s a clunky program to administer,” he said. “We can operate that program more cheaply and send out more rebates. That’s what we’re looking to do.”
Susan Zeller is chief performance officer for the Agency of Administration. She’s a veteran of past efficiency drives, including the Strategic Enterprise Initiative and Challenges for Change, both of which were launched during Jim Douglas’ governorship. “Challenges for Change failed because it had a cost-cutting mandate,” Zeller said. “These things shouldn’t have money targets or RIF [Reduction In Force] targets. The payoff is improvement in processes and service.”
Scott has changed his tune since 2016. There’s no more talk of savings targets. “I think we can always improve every single day. It’s part of my background in business,” the governor said at a Jan. 30 press conference. “There wasn’t a day that went by that I didn’t look for an opportunity to become more efficient, more effective, more productive.”
Or, as Zeller put it, “We try to make things easier, better, faster and cheaper. And cheaper is the last thing we think about.”
That’s not a compelling pitch for the campaign trail. But it is the substance of running a big organization — especially one that’s really a whole bunch of big organizations, each with its own internal culture. “It takes five to seven years to create cultural change,” Zeller said. “We’ve been working for three and a half years.”
As an example of the challenges she faces, Zeller cited the security clearance process for outside contractors working in state buildings. “Every department and agency has its own standards,” Zeller said. “If you’re a plumber, you have to go through multiple security clearances. We propose that the Departments of Public Safety and Buildings and General Services will share responsibility. Once you’re approved, you’re approved for all buildings for five years.” That simple initiative, derived through consultations with all affected agencies and departments, must also gain legislative approval. That won’t happen until 2021 at the earliest.
The term PIVOT itself seems to be going out of favor in the administration. Officials now talk about “Continuous Improvement.” That doesn’t make for a catchy acronym, but it does better reflect the complexity of a process that doesn’t play out on a political timetable.
According to Greshin, the size of the state government workforce has stabilized under Scott, after years of increases. “It’s not because big bad Republicans don’t like workers,” Greshin said. “It’s because we’re trying to utilize more efficiently the workforce we have. And I think the administration can claim that it has done that.”
But it can’t claim $55 million in savings in a single year.
Zeller, the veteran of failed efficiency initiatives past, gives Scott and his cabinet credit for being “very supportive” of a multi-year effort that doesn’t yield immediate, politically popular results. “My goal is to build the culture of continuous improvement into the structure of government,” she said. “It’s not tied to Gov. Scott; I want it to survive a change of administration.”
Remember that the next time you hear a candidate talk about cutting the fat or eliminating waste and fraud. As Scott has learned through experience, it doesn’t work that way.