The Efficiency Chimera Strikes Again

It’s magical!

If you had a time machine and chose, not to kill Young Adolf Hitler or have lunch with Jesus or ride horsies with Alexander the Great, but to go back to 2016 and listen to a speech by gubernatorial candidate Phil Scott, you would hear some familiar phrases. “Cradle to Career,” “Affordability,” “Protect the most vulnerable,” stuff he still says all the time.

You would also hear something you couldn’t hear without a time machine because Scott doesn’t say it anymore: “Lean management.” Here’s his campaign pitch, with a specific target number attached:

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. Saving one penny on the dollar generates about $55 million in savings. 

Yeah, well, then he got elected and things became much harder. This is what usually happens when a businessperson enters public office convinced that big savings are ripe for the picking, if only a little common-sense efficiency is applied.

The actual results have been embarrassingly puny. When asked about this back in February, after three years of Scott’s governorship, the administration pointed to $13 million in projected savings in his FY2021 (the year starting 7/1/20) budget. More than one-third of that total was due to the proposed closure of the Woodside juvenile facility, which had nothing to do with lean management.

Actual results: Not $55 million in the first year, but something less than $10 million in year four.

And you have to subtract, from whatever the actual savings were, the costs of training hundreds of state workers in lean management processes. (By the administration’s own accounting, 671 workers and managers in all.)

So you never hear Scott or his minions boast about lean management anymore. If they’re asked about it, the response is along the lines of this from Finance Commissioner Adam Greshin: ““It’s not necessarily about savings, it’s about maybe spending the same amount of money and providing better value.”

Possibly true, but unquantifiable — and not at all what Scott was promising as he ran for the top job.

It’s always fun to play “gotcha” with a politician’s promises, but this failure to find tens of millions in savings has had real consequences in terms of Scott’s ability to get stuff done.

If Scott had been able to wring $55 million out of the budget from Year One onward, he’d have a nice little pot of money to fund initiatives without raising taxes. In the absence of those savings, he can only propose small-bore programs like the infamous remote-worker grant program. Given the stricture of his no-new-taxes stand, he can’t afford an ambitious broadband rollout or an investment in the green economy or even a nice tax cut. So, as he runs for a third term, he offers more bemoanings than promises.

And what does Scott do when he needs to trim spending? The last resort of the scoundrel: Across-the-board cuts. That’s what you do when you can’t find that elusive fat — the chimera also known as “waste, fraud and abuse” — to cut out of the budget.

The truth is, it’s hard to cut public-sector spending because each program has constituencies — those who receive benefits or who profit from government contracts. Also, the public sector has to satisfy, or at least mollify, every constituent. You can’t just cut or streamline a product or service and write off lost customers as a cost of refocusing your business. You have to maintain money-losing operations. FedEx or UPS can kill unprofitable deliveries, but the Postal Service has to fulfill its mandatory six-day delivery to every home address in the country.

(I know, the Postal Service is technically a non-government operation, but it functions within the strictures of federal mandates.)

Or take charter schools. They can choose their students. They can decide whether or not to accept, for instance, kids with special needs. They can mandate parental involvement. The public school system, meanwhile, has to accommodate every student that shows up on the doorstep. That’s basically why charters seem cheaper than public schools: they have built-in advantages.

Just something to remember the next time you hear an office-seeker boast about how easy it’d be to cut the cost of government. It’s not.

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