Reducing number of state agencies is not about reducing government
By David Ferguson
Governor Asa Hutchinson announced that if he is reelected he will reduce the number of state agencies from 42 to 20.
Judging by social media posts, both his supporters and his critics seem to assume the announcement is a conservative move to reduce the size of state government. Supporters see the announcement as showing his conservative credentials. The Governor’s critics see the announcement as a political move to head off his opponent in the Republican primary, Jan Morgan, by trying to appear conservative after three years of growing government.
What both supporters and critics misunderstand is …. reducing the number of state agencies is not about reducing the size of state government, not about any significant reduction in state expenditures, and has nothing to do with being conservative or liberal.
What the Governor is talking about is how to manage the same amount of government. It is about management style. The proposed administrative consolidation effort could result in some savings or could result in higher management costs.
The Governor has not corrected the misunderstanding of supporters and critics. So I expect critics will ask, “Were we supposed to misunderstand during the campaign?”
Perhaps I should also clarify that the campaign promise has nothing to do with the long list of licensing agencies.
The Governor said he hopes the administrative consolidation of state agencies will result in “efficiencies” in government. Agency heads will definitely look for efficiencies but finding financial savings will be a more difficult task.
STAFFING? Administrative consolidation of agencies does not necessarily mean lower staff costs. In some consolidations an additional level of management is created on top of what exists, plus there can be a reluctance to reduce salaries of employees who were agency heads and who become division managers.
The Governor has already said “NO” to cutting staff. Instead he says IF there can be a reduction in staff, it will be handled by not filling some vacancies. This is similar to the many hiring freezes over the years and yet government has continued to grow.
OPERATIONS COSTS? Another factor limiting savings is the new divisions will still be housed in various locations and buildings around Pulaski County. This limits the ability to combine services. For example, copier services or computer services are hard to combine when there are distances between divisions.
MAJORITY OF AGENCY EXPENDITURES ARE NOT IN PLAY. Staff and internal operations costs are only a small part of government expenditures. For example, the Department of Human Services oversees massive social programs and even if you could eliminate all staff costs, the reduction would only be a drop in the bucket of agency expenditures.
BENEFITS FROM COMBINING STATE AGENCIES?
IF THERE IS A NEED TO WORK TOGETHER. Where agencies are doing closely related functions there are efficiencies to be had, even if the efficiency is nothing more that providing better services. For example the legislature’s Bureau of Legislative Research absorbed the staff of the Arkansas Code Revision Commission under Act 1260 of 2005, while the act did not result in a saving in staffing, it allowed the two staffs to better work together on drafting and codifying legislation.
Targeting agencies with overlapping functions is a good idea. But this will be more difficult to find when trying to hit a goal of reducing administrative heads from forty-two to twenty.
MANAGEMENT STYLE. The main benefit will be in the Governor’s ability to manage state agencies because he would have a smaller cabinet reporting to him. This is about management style. Governor Mike Beebe (D) had as many agencies but didn’t seem to be hampered by it. This is likely because of Beebe’s hands-on management style and his thorough knowledge of state government from his previous service as a state Senator and as the Attorney General.
RESOURCE SHIFTING. Another benefit to a Governor is that consolidation of agencies makes it easier to shift resources from one program to another without the need for legislation. This is great if you are a Governor, but in the past, there have been complaints by those whose resources are being taken. For example:
- Resource stealing was one of the complaints that came up in the failed consolidation of the Department of Human Services and the Heath Department into the Department of Health and Human Services by Act 1954 of 2005. Some in the Health Department claimed their ability to perform their required duties was hampered by resources being shifted to Human Services.
- Resource stealing is also at the heart of complaints about Governor Hutchinson moving the Arkansas History Commission to the Department of Heritage. The resource being shifted is the office space of the State Archives which has specially designed climatic controlled vaults to protect documents. A plan to move the archives to an old building has been controversial because of concern that the irreplaceable documents will not be adequately protected.
AGENCY CONSOLIDATION – EXAMPLES OF A SUCCESS AND A FAILURE
FAILURE. The biggest agency consolation disaster was Governor Mike Huckabee’s merger of the Arkansas Department of Health and the Arkansas Department of Human Services into a new agency named the Department of Health and Human Services. It was thought the agencies related missions would lead to efficiencies in government. Instead, the next two years was a nightmare. During the transition period I talked to several employees of the new agency. They told me of being pulled off critical work for their divisions to spend substantial time and effort to try to get the already large agencies to speak the same language. Computer systems had to be standardized. Specialized programs had to be redone so the programs could talk across the new agencies. Stacks of forms and procedures had to be standardized. In many instances standardization resulted in a poor fit for one agency or both because of their varying missions. And as mentioned before there were complaints about resource stealing from Health to Human Services. The Health and Human Services merger was such a disaster, after two years the agencies were restored as separate agencies by Governor Mike Beebe pursuant to Act 384 of 2007.
SUCCESS. Governor Huckabee also had a success in 2005 by Act 1978 of 2005 which created the Arkansas Agriculture Department and merged several agencies into the new agency. Merger of the agencies was NOT DONE TO SAVE MONEY NOR WAS IT DONE TO REDUCE GOVERNMENT; instead it furthered the goal of increasing the status of the new agency and of agriculture in state government.
WHY NOT CONSOLIDATE NOW INSTEAD OF MAKING PROMISES?
A Facebook user asked, “Why is he delaying until after reelection when he could have included it in the special session?” The Governor’s announcement came on the heels of the special session of the General Assembly which he called and which he controlled the agenda. The insinuation made by the question is since the Governor didn’t do anything in the special session the timing suggests it is campaign stunt.
But there is another good political reason to delay consolidation until after the election. In any consolidation of agencies there is the likelihood that some groups affected by the consolidation will be upset. Taking on such complaints in the middle of a campaign season would not be wise for any incumbent.
CONSOLIDATION OF STATE AGENCIES A GOOD THING?
Having a smaller cabinet is generally a good idea. How the idea is executed will determine whether it is worthwhile. The administrative consolidation of the state agencies is likely to be a difficult process.
But here again is the point I am making. The announcement has been misunderstood …. reducing the number of agency heads from forty-two to twenty is not cutting government and is neither conservative or liberal. It is about reducing the size of the Governor’s cabinet.
David Ferguson is a former Director of Arkansas’ Bureau of Legislative Research, having a thirty-two-year career as an attorney for the Arkansas legislature. After retirement from state service his primary focus has been beef cattle farming. He is also a former officer of Conduit for Action.