RALEIGH — When North Carolina Gov. Bev Perdue recently announced her plans for a remake of state government, she was participating in what is being called in state capitals across the country "the big reset."
Faced with their worst fiscal picture since the Great Depression of the 1930s, governors are scrambling to find ways to make state government leaner and cheaper by reorganizing agencies, laying off employees, privatizing services and eliminating boards and commissions.
In Virginia, Gov. Bob McDonnell is considering such options as privatizing the sale of liquor and moving some state employees to a workweek of four 10-hour days. Massachusetts has consolidated five agencies into one transportation agency. The state of Washington eliminated 143 boards and commissions.
"This crisis is forcing governments to look at everything," said John Thomasian, director of The Center for Best Practices for the National Governor's Association in Washington.
"I think she [Perdue] is doing a pretty good job," Thomasian said. "They are looking at the whole function of government at every place they can save."
Some question effort
But does such government reshuffling actually save money? Among the skeptics is Richard Kearny, an expert on state and local government at N.C. State University.
"Reorganization is a very attractive theory," said Kearny, director of the NCSU School of Public and International Affairs and the author of a widely published text book on state and local government.
"The theory being that reorganization would streamline government operations and improve agency and bureaucratic performance and most importantly save money by eliminating duplication or reducing layers of bureaucracy," Kearny said. "But the reality is different. What states have experienced in different ways in reorganizational activities is that its benefits are ephemeral. There may be some modest savings. But there are also some negative implications."
Like many governors, Perdue is taking a broad approach as the state faces what is projected to be a $3.7 billion shortfall out of a current $21 billion budget next year, proposing privatization, budget cuts, and eliminating boards and commissions.
Perdue has proposed to the legislature a sweeping restructuring of state agencies, merging 14 high-level state functions into eight.
She would combine the Departments of Juvenile Justice and Delinquency Prevention, Correction, and Crime Control and Public Safety into a new Department of Public Safety.
The Employment Security Commission would be folded into the Department of Commerce.
The Department of Administration would be merged into a new Department of Management and Administration that would include the Office of State Personnel, Information Technology Services and the Controller's Office. As part of the move, 100 or more computer services facilities will be shut down.
Perdue said the reorganization will bring layoffs, particularly in middle management.
The governor said that Wednesday she met a woman from Durham who is an IT worker for the state.
"Her one question for me ... was, 'Governor, I guess you are going to eliminate my job,'" Perdue said. "I couldn't say. It might happen."
Perdue said she talked last week with Washington Gov. Christine Gregoire, after Gregoire announced that her state would cut 8,200 workers.
"She said it made her sick to her stomach," Perdue recalled. "But at the end of the conversation, we both agreed that we were both elected to do what you have to do.
"I think at the end of the day, people will accept the fact that I am doing what you have to do to keep our budget moving forward to protect jobs and to help ensure we have a good educational system. I am going to make a lot of people unhappy, and I'm sorry."
In making her recommendations, Perdue is following a well-worn path. Much of the current shape of North Carolina's state government was created during the Depression when Gov. O. Max Gardner hired the Brookings Institution of Washington to conduct a study to help make state government more efficient.
Since 2009, at least 17 states have consolidated or eliminated agencies, according to the governor's association. Iowa's Department of Health and Human Services consolidated 99 full-time county offices to 42 this year.
Michigan Gov.-elect Rick Snyder is setting up a six-person "super cabinet" to keep his initiatives on track.
Good on paper, but ...
Kearny said reorganizations that look good in flow charts often work less well in reality. They often involve agencies with different cultures, different missions and different kinds of people.
He noted, for example, that Perdue is proposing to put computer specialists in the same agency with human resources specialists.
"I can tell you that IT and HR are very different people and are different entities," Kearny said. "One is largely staffed by technical people with technical interests. The other is staffed by individuals who have training in the soft skills, human resource management. If putting these two entities in the same agency would help, that would be great. But it's more likely to provoke dissension and confusion and turf battles."
He also noted that Perdue's proposal to centralize personnel operations runs contrary to trends in public management, where the thinking is that it is better to have human resources people close to the agencies they work with.
Perdue has also proposed some privatization of services now done by state employees, particularly involving computer operations and purchasing. She is also looking at turning the forensic psychiatric unit at Dix hospital over to a private company and is considering selling the state-run ABC system to private interests.
Many states have taken similar steps. Illinois is considering letting a private firm run its lottery. Georgia is seeking a private partner to manage the state's rest areas and welcome centers, while New Jersey is discussing having private vendors manage state forests and parks.
Kearny said there are some problems with privatization. They can present potential conflicts of interests, because the companies are primarily interested in making a profit.
Some privatization efforts involving computers have been "horrible failures," Kearny said.
Thomasian said reorganization should be viewed as part of a broader approach that includes a range of economy measures including reorganization, downsizing, eliminating boards and commissions, and privatization..
"Reorganization by itself is not a huge money saver," Thomasian said. "But as all of these governors will tell you, you can't rely on going after one area."
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