U.S. GOVERNMENT PRINTING OFFICE

74–332 DTP WASHINGTON : 2001

INNOVATIONS IN AMERICAN GOVERNMENT: ARE

THERE LESSONS TO BE LEARNED

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

SEPTEMBER 6, 2000

Serial No. 106–254

Printed for the use of the Committee on Government Reform

(

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Mail: Stop SSOP, Washington, DC 20402–0001

(II)

COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH-HAGE, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

JAMES C. WILSON, Chief Counsel

ROBERT A. BRIGGS, Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

EARL PIERCE, Professional Staff Member

BRYAN SISK, Clerk

MICHELLE ASH, Minority Counsel

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C O N T E N T S

Page

Hearing held on September 6, 2000 ....................................................................... 1

Statement of:

Gaberman, Barry, senior vice president, Ford Foundation; Gail Christopher, executive director, Innovations in American Government

Awards Program, Kennedy School of Government, Harvard University;

and Patricia McGinnis, president and CEO, Council for Excellence

in Government .............................................................................................. 7

Sharbaugh, Antony, director, Office of Human Resources, Gainsharing

Program of Baltimore County, MD; Allan Klein, administrative law

judge, Government Innovations and Cooperation Board of the State

of Minnesota; and Jess McDonald, director, Illinois Department of Children and Family Services ............................................................................. 39

Letters, statements, etc., submitted for the record by:

Christopher, Gail, executive director, Innovations in American Government Awards Program, Kennedy School of Government, Harvard University, prepared statement of ..................................................................... 18

Gaberman, Barry, senior vice president, Ford Foundation, prepared statement of ........................................................................................................... 9

Horn, Hon. Stephen, a Representative in Congress from the State of

California:

Information concerning pre-admission screening and schools ............... 91

Prepared statement of ............................................................................... 3

Klein, Allan, administrative law judge, Government Innovations and Cooperation Board of the State of Minnesota, prepared statement of .......... 51

McDonald, Jess, director, Illinois Department of Children and Family

Services, prepared statement of ................................................................... 82

McGinnis, Patricia, president and CEO, Council for Excellence in Government, prepared statement of ........................................................................ 29

Sharbaugh, Antony, director, Office of Human Resources, Gainsharing

Program of Baltimore County, MD, prepared statement of ...................... 42

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 5

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INNOVATIONS IN AMERICAN GOVERNMENT:

ARE THERE LESSONS TO BE LEARNED

WEDNESDAY, SEPTEMBER 6, 2000

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10 a.m., in room

2154, Rayburn House Office Building, Hon. Stephen Horn (chairman of the subcommittee) presiding.

Present: Representatives Horn, Biggert, and Turner.

Staff present: J. Russell George, staff director/chief counsel; Earl

Pierce, professional staff member; Bonnie Heald, director of communications/professional staff member; Bryan Sisk, clerk; Elizabeth Seong, staff assistant; George Fraser, intern; Michelle Ash

and Trey Henderson, minority counsels; and Jean Gosa, minority

assistant clerk.

Mr. HORN. A quorum being present, the hearing of the Subcommittee on Government Management, Information, and Technology will come to order. One of the continuing goals of this subcommittee is to encourage reforms that will make the Federal Government more efficient and effective. Today, we will examine three

State and local programs that have been honored for being uniquely successful at both of these objectives.

These programs are among 25 semifinalists selected by the Innovations in American Government Awards program. This grantissuing program is funded by the Ford Foundation and administered by the Harvard University Kennedy School of Government,

and the Council for Excellence in Government.

The 25 semifinalists are now competing for the program’s 10 top

awards, which include $100,000 grants to each winner. Each of the

remaining 15 semifinalists will receive grants of $20,000. The selection will be made next month.

The semifinalists were selected from 1,500 applications submitted by Federal, State, and local government agencies. All of those

selected have demonstrated originality and effectiveness in providing important public services.

Today, we will examine the factors that led to the success of

these programs and whether those factors might be applied to similar Federal programs.

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We welcome each of our witnesses, and look forward to your testimony.

I now turn for an opening statement to the ranking member, the

ranking Democrat, Mr. Turner, the gentleman from Texas.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. TURNER. Thank you, Mr. Chairman. It is good to have our

witnesses here this morning.

There is no doubt that the Innovations in American Government

Awards program is an outstanding effort jointly sponsored by the

Ford Foundation and the Harvard University Kennedy School of

Government, and the Council for Excellence in Government.

This effort is the kind of thing that we need more of today. I

have always believed that government can be as efficient and as effective as the private sector if we are willing to take the necessary

steps to make that possible.

This program, as I understand it, awards funds to various governmental entities where there has been shown to be a positive improvement in government management or government innovation.

We all know that we live in a day when we have to make government smaller and more effective in order to not only save taxpayers’ dollars, but to create the kind of government that the

American people deserve.

This program attempts to encourage government to make the

right choices in terms of priorities, to encourage greater involvement by employees of government, to improve management policy,

and to focus more on results. These are things that our committee,

under Chairman Horn’s leadership, has attempted to accomplish

over the past year, and we hope that we can continue to be a part

of the effort to bring greater efficiency to government. So we appreciate the witnesses coming today.

I wish all of the awardees could be here to share with us their

programs. But we are very pleased to have these outstanding examples brought to us in the three witnesses before us.

So thank you, Mr. Chairman. I look forward to hearing from each

our witnesses.

[The prepared statement of Hon. Jim Turner follows:]

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Mr. HORN. Thank you very much. And we will now have panel

one begin. And you probably know from previous presentations before this subcommittee, we are an investigative subcommittee, so

we do swear in all witnesses even though they bear good deeds. So

if you will stand and raise your right hands.

[Witnesses sworn.]

Mr. HORN. The clerk will note all three witnesses have affirmed

the oath.

And we begin with Mr. Gaberman. Barry Gaberman is senior

vice president of the Ford Foundation.

Mr. Gaberman.

STATEMENTS OF BARRY GABERMAN, SENIOR VICE PRESIDENT, FORD FOUNDATION; GAIL CHRISTOPHER, EXECUTIVE

DIRECTOR, INNOVATIONS IN AMERICAN GOVERNMENT

AWARDS PROGRAM, KENNEDY SCHOOL OF GOVERNMENT,

HARVARD UNIVERSITY; AND PATRICIA McGINNIS, PRESIDENT AND CEO, COUNCIL FOR EXCELLENCE IN GOVERNMENT

Mr. GABERMAN. Thank you, it is a pleasure to be here with you

today. What I’m going to try to do is trace very briefly the history

of the Innovation in American Government program, and in doing

so, highlight four objectives of the program under the categories of

recognition, replication, learning and visibility.

In the early 1980’s, it was common to hear increasing expressions of doubt in the United States about the ability of government

at all levels, as well as those in government to perform. As a foundation, we could have chosen to support those studying and analyzing this failure to perform and thereby perhaps add to our understanding of the problem.

However, we knew that there was much that was productive

going on in government, but the accomplishments remained hidden, not only from the American people, but also from the broad

number of public managers who would benefit from knowing about

them. What we decided to do instead was not to study and analyze

failure, but to highlight and recognize success.

Staff from the Ford Foundation began working with the Kennedy

School to design an awards program. The first objective of that

awards program was recognition of innovative achievements in

State and local government. We in the Kennedy School established

a national selection committee to select the award winners. The

program made its first awards in 1986. Each carried a grant of

$100,000. As the program matured, we add $20,000 awards for the

15 finalists each year who did not become winners.

In 1995, the program was expanded to include Federal agencies.

To date, the program has recognized 225 innovative programs.

They have received $15.9 million in Ford Foundation grants. And

still, after 14 years, the submissions to the program each year average over 1,500 applications.

While the awards provide recognition, it is important to note that

they also target replication as an objective. Each of the $100,000

grants are to be used by leaders of the winning programs for replication and getting the word out about the innovations and their

results.

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That this is working can be seen from the fact that fully 85 percent of the models represented by Innovation Awards winners have

indeed been replicated.

The committee may find it interesting to know that this approach to supporting innovation and promoting excellence is working elsewhere in the world. In fact, in 1988—1998, the Foundation

began support of an awards program honoring contributions in the

governance of American Indian Nations. This is administered by

the Harvard Project on American Indian Economic Development.

The third objective of the awards program was to promote learning about innovation. To capture the lessons of best practices in

government innovations, the Foundation has funded the Kennedy

School’s work, developing case studies and classroom materials for

public managers. And to spread those lessons throughout the country, we have sponsored conferences on innovation throughout the

country. As a result, in some places, the formal teaching of public

management has shifted from teaching based on failure to teaching

from positive examples.

The fourth objective of the innovation program is visibility. This

is important to help convince the public that government is capable

of responding to critical, emerging social and human problems. The

program has done precisely that for 14 years, discovering a wealth

of productive innovation that has exceeded our expectations and

strengthened our commitment to the program. But while we have

sought to publicize what is being achieved, word has not yet

reached the broadest American audience.

To call public attention and enhance visibility more directly to

accomplishments, the Foundation, working with the Council for Excellence in Government, formed in 1997 a coalition of 34 prominent

business and civic organizations whose leaders share our concerns.

It is called the Partnership for Trust in Government. The partnership includes corporations like IBM and Tenneco, independent

groups like the Girl Scouts and the League of Women Voters and

media organizations like Discovery Communications and Good

Housekeeping Magazine.

Partners have agreed to use their own communication and other

resources in a sustained program to put before their members, customers, employees, and stakeholders stories and examples of good

government. By doing so, they will help to restore the balance between healthy criticism and trust.

A final word about the Ford Foundation’s commitment to these

programs. We know that the quality of government matters a great

deal. Government sets standards, protects the weak, provides services, and projects a vision for us all. At a time when it is often fashionable to see not-for-profit and for-profit organizations as alternatives to government, it is important to show that government

can work effectively and efficiently on its own and in creative partnerships with the other two sectors of society.

Thank you very much.

Mr. HORN. Thank you.

[The prepared statement of Mr. Gaberman follows:]

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Mr. HORN. And we now move to the second presenter, Ms. Gail

Christopher, the executive director, Innovations in American Government Awards Program, Kennedy School of Government, Harvard University.

Ms. Christopher.

Ms. CHRISTOPHER. Good morning. I would like to thank Chairman Horn and the members of the subcommittee for inviting me

to testify. It is indeed a pleasure and an honor.

In my testimony, I’ll briefly elaborate on the selection process:

how we come to select these outstanding programs; what are some

of the themes that we found, those themes which resonate throughout the winners this year; and some of the important lessons that

may be of valuable insight to this community.

The selection process involves whittling down the 1,500 applications to 100 semifinalists. That process engages 30 to 40 teams of

faculty and public sector leaders from Harvard University and

other universities.

After that first round of evaluations, there is a second round. The

second round also consists of teams of leaders who evaluate the applications. Those that make it through the second round produce

our slate of 25 finalists.

Finalists are then subjected to an intensive site visit. An extensive report is prepared on the site visit, and as you heard earlier,

the 25 finalists are then allowed to make presentations at an event

here at the National Press Club in Washington in October. From

that group, 10 winners are selected. The 10 winners receive the $100,000 prizes, and as you know, the 25 finalists all receive $20,000 grants.

We are excited by the fact that each year we continue to get a

high number of applications. In the last year, we introduced the capacity to apply electronically, or on-line, and we are noting that

over half of our applications are submitted electronically.

We found—and this was expressed in a prior hearing; Professor

Alan Altschuler, who was then the faculty director for the Innovations Program, has found that there are some themes that seem to

permeate the winners. What are they?

The first and perhaps most important and relevant is accountability for outcomes—not just a focus on process, but on results and

outcomes. Responsiveness to citizen input is another key theme;

competitiveness as a stimulus for performance improvement; and

in terms of regulatory agencies, new roles for those agencies so that

they work in partnership seeking voluntary compliance, but not

giving up their role of oversight and regulation and enforcement.

Those themes were noted in 1997 and here, 3 years later, they

still resonate with the programs for the year 2000.

I find it interesting to note that those are also themes that we

find in this performance-based era of governance. And there may

be some interesting lessons to look for at the intersection between

the performance-based governance movement and innovation: How

important is innovation to the success of that process?

But we can also find that there’s organizational change, that government agencies, the outstanding programs, are finding new ways

to engage employees, frontline employees; new ways to hold contractors and consultants accountable, not just forever process, but

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for outcomes. And the programs that you will hear about in the

next panel will illustrate that very clearly.

We’ve asked ourselves, what is the challenge that we face in

terms of the Innovations Program itself? And I think we are concluding that our biggest challenge now is to be more creative in

using today’s technology to monitor and assess the overall impact

of the Innovations Programs. To find ways to be more supportive

of innovators in the second phase of their process, if you will, after

they are recognized as winners; how do we bring them together as

communities of innovators so that they can have a greater influence on others around the country who are struggling with the

same issues?

We are very pleased to partner with the Council for Excellence

in Government, which plays a key role in supporting the dissemination of the ideas and the replication of the programs throughout

country.

Thank you.

Mr. HORN. Well, we thank you.

[The prepared statement of Ms. Christopher follows:]

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Mr. HORN. And next is Patricia McGinnis, the president of the

Council for Excellence in Government.

Ms. MCGINNIS. Thank you, Mr. Chairman, and thank you Mr.

Turner.

We at the Council for Excellence in Government very much appreciate the commitment of this subcommittee and committee to

improving government performance and focusing, as you said, not

only on getting better results, but also on having a government

that connects more directly with the citizens that it serves.

The Council for Excellence in Government is a nonprofit, nonpartisan organization whose members are business leaders who

have served in government and are committed to improving its performance and also increasing public understanding, involvement

and confidence in government.

Because innovation is such a key element of excellence in government, we are delighted to partner with the Ford Foundation and

the Kennedy School in this award program. Our role began in 1995

when the Federal winners were added.

I’d like to just take a moment to thank and commend the Ford

Foundation for its sustained commitment to fostering innovation in

government, not only in this country but around the world. Barry

did not mention the various programs that have been initiated,

particularly in developing countries around the world, which have

had so much impact. And to say what a pleasure it is for us at the

Council to work with Gail Christopher and her very creative colleagues at the Kennedy School to analyze and find these trends in

innovation.

The Council’s role is to work with the winners and finalists in

their effort to promote replication of the innovations and to help

communicate these success stories to the American public. We do

that by helping to organize conferences, working to publish books,

writing case studies, creating Web sites; and also, as Barry

Gaberman said, we’ve worked with the Ford Foundation to organize a coalition of 34 businesses and civic organizations that use

their communications mechanisms to try to get the word out about

these innovators and other successes in government, and they

range from IBM to MTV, so you can imagine what a pleasure it

is to work with this diverse coalition.

I want to mention two books that have come out of the Innovations Program, in particular, which the Council has copublished

with Brookings, that talk about the value of innovation. The first

one is called ‘‘Making Washington Work.’’ It was edited by Jack

Donahue, who is a professor at the Kennedy School, and it includes

14 case stories of Federal innovations winners. And when Alan

Altschuler was the faculty director of the Innovations Program, he

and I put together the forward to this book and we tried to think

about what the innovators had in common. What it is about these

teams of people that make them so successful? And I just want to

read you a passage.

The designers and managers of these programs started with profound commitment to a mission anchored by clear conceptions of purpose. They were flexible and

ingenious about the means of accomplishing their goals. They stretched their minds

and resources to use whatever tactics—interagency and public-private partnerships,

new information technologies which we are seeing more and more of, performance

measurement, market incentives, employee and citizen participation, whatever apVerDate 11-MAY-2000 08:52 Aug 27, 2001 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 C:\DOCS\74332.TXT HGOVREF1 PsN: HGOVREF1
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peared likely to yield better results. They displayed habits observed among

innovators everywhere, in the private no less than the public sector.

They were committed, they were willing to take risks in the service of their mission, they were courageous and their stories are likely to prove fascinating not only

to those who are currently charged with public responsibilities, but for those who

are preparing for careers in public service.

A second book that we also copublished with Brookings and was

written by Kennedy School Professor Malcolm Sparrow has just

been published in the last few months, called ‘‘The Regulatory

Craft,’’ has also drawn on Innovations winners to analyze what’s

likely to work best in the regulatory arena. So I will leave you copies of these books.

Innovative government programs such as the ones you’re going

to hear from this morning are helping to reverse a tide of public

cynicism. As you know, for several years now, the Council has

worked with pollsters Peter Hart and Bob Teeter to analyze attitudes toward government. Our 1999 poll shows that 30 percent of

the American people trust the Federal Government to do the right

thing all or most of the time, substantially above the low point of

21 percent in 1994, but we’ve got a long way to go to achieve the

74 percent which was the high point in the 1960’s.

I would settle for something around or above 50 percent. That

seems like a good balance between skepticism and trust to me.

I want to mention a finding in the poll that interests us and I

think will interest you, and that is about the attitudes of young

Americans. Young people are less connected; they feel less connected to government than their elders, but at the same time, they

seek the potential of government in a much more positive way.

They see the role of government as more important in the future.

And this may surprise you, we’ve seen trends over the years that

more and more young people in the 18 to 29 age group are interested in government service. Our 1999 poll found that 43 percent

said they would be very likely or fairly likely to consider a government job sometime in their careers. This was up from 40 percent

in 1997 and 36 percent in 1995. But the challenge for government

here is to recruit young people in a more creative way and to offer

them jobs in which they can innovate and make a difference, like

the three innovators you’re about to hear from.

So I want to thank you again for your outstanding and longstanding leadership in this area. There’s clearly a lot to be done.

We appreciate very much your ‘‘Dear Colleague’’ letters to bring

these programs to the attention of others, the hearings you have

held; and we look forward to working with you to acquaint the

other authorizing and appropriations committees with these examples of excellence in government.

Thank you, Mr. Chairman.

[The prepared statement of Ms. McGinnis follows:]

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Mr. HORN. Well, we thank you for all the fine work you’re doing.

Are those soft covers or are there any hard covers on those books?

Ms. MCGINNIS. They’re all soft.

Mr. HORN. I would suggest that you give the ranking member a

set. The staff on their side, the staff on our side and thank you for

presenting them to us. If anybody is going to do that around here

and use them, it’s going to be this team here, on a bipartisan basis.

Let me ask now, have any Federal programs won awards? I saw

where HUD was involved. And if so, which ones are Federal in this

round? Do we know yet?

Ms. MCGINNIS. Actually we can provide you with a list of the 25

public programs, and it includes five Federal finalists.

Mr. HORN. It includes five, OK. What I want from this panel and

from the next panel, which are living some of these problems, this

subcommittee is very concerned about the qualitative and the

quantitative measurements that an agency can utilize in order to

know if they’re on the right course.

Are they implementing this properly? Are those who are the clientele gaining benefits in an effective way? What can you tell us

from all of these experiences now, the three of you that have gone

through a lot of these? What can you tell us about quantitative and

qualitative measurements, and what’s your best success story, particularly at the Federal level?

Ms. MCGINNIS. Well, let me start while Gail is—Gail is the new

executive director of this program, and let me start with the last

part of your question.

I actually think in terms of quantitative measures one of the

greatest success stories at the Federal level has been the Food and

Drug Administration’s work to accelerate the drug approval process. They were able to cut in half the average time that it takes

to approve new drugs and cut down substantially more than that

the time it takes to approve drugs for cancer and AIDS and other

more emergency-oriented drugs.

And they did this with the help of the Congress, naturally.

Mr. HORN. I was going to say that the Congress beat them over

the head, I think, on this one.

Ms. MCGINNIS. The Congress beat them over the head. The industry beat them over the head and legislation was passed, but

what they were able to do went beyond that. They reengineered

this entire process to produce gains that would have exceeded expectations given the additional funding that was provided through

the PDUFA program; and actually that case is described in ‘‘Making Washington Work,’’ so you can take a look at it.

Mr. HORN. Great, look forward to seeing it.

Any other thoughts at this point on the Federal programs, quantitative and qualitative, and what works? And if not, tell me what

works on the local level that the Federal Government ought to

apply.

Ms. CHRISTOPHER. It is a blend of both—we recently convened

over 250 past winners in the area of health care innovation and the

Bureau of Primary Health Care was a partner in that process.

Many of those who gave their stories, the local and the Federal examples, talked about the quantitative reductions in hospitalizations

for things like diabetes complications as a result of giving more

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preventive and primary care and engaging physicians in a volunteer capacity to increase access to health care.

As I spoke earlier, our challenge is to work more on the back end

to monitor the long-term impact of these efforts so that we have

more quantifiable data to report. It is clearly a challenge that we

face. The focus on results, however, is an important factor in the

evaluation process and all those programs that do win, they show

us some quantitative indications of effect or results in the process.

Mr. HORN. Any other comments?

Mr. GABERMAN. Well, I think one way you can think about this

is in terms of the replications themselves. The premise is that if

in fact it’s an effective program, it does get picked up and get replicated. And I think we all have favorites of one kind or another.

I like, just for the common sense and simplicity of it all, a program

that was a winner in 1993, and it was the Police Homeowners Loan

Program in Columbia, SC. And the nature of that program was to

provide loans to police officers to renovate and purchase homes in

inner-city communities as a way of stabilizing those communities.

Well, that’s been picked up and has now been replicated by over

70 municipalities and agencies throughout the country. So that’s

one indication of a benchmark that shows some success.

Mr. HORN. One last point on the books you have and the Plum

book caught my eye. Mr. Turner and I and the committee have

moved legislation through the House, now in the Senate and about

to go to the President, in terms of transitions in the Presidency. So

I assume that book would help us a lot.

Ms. MCGINNIS. Yes, the Plum book actually has drawn on these

innovations cases as well. What we’ve looked at is what it takes to

succeed in the top appointed jobs in Washington and we commend

your legislation. We very much hope that it passes and that it provides the opportunity for a more thoughtful and organized transition and some orientation of new appointees.

Mr. HORN. Well, we’ll sure make good use of your books, I’ll tell

you that, because if the President’s appointing various Cabinet positions, independent office positions, our basic idea has been, say,

go see the budget examiner, go see the GAO relevant person, go see

the Inspector General, etc. And if you can put that in a context,

why we would be very appreciative of that.

I now yield to the gentleman from Texas, Mr. Turner.

Mr. TURNER. Thank you, Mr. Chairman. I’ve had an interest,

along with the chairman, in trying to move the Federal Government into a greater utilization of information technology, our belief

being that the private sector is moving faster than the public sector

and, in particular, that the Federal Government has lagged. I even

have introduced a bill trying to put a greater emphasis on information technology by urging the creation of a Federal chief information officer with the power to do cross-agency initiatives in the area

of information technology.

I’d really like to hear each of your views on the need for the

greater use of information technology in the Federal Government,

and particularly whether or not you view that there exists a need

to emphasize that to a greater degree than perhaps the Federal

Government has in the past.

Ms. McGinnis, do you have any thoughts on that?

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Ms. MCGINNIS. Absolutely. As you may know, this is a very high

priority for the Council for Excellence in Government. And we have

seen in the Innovations winners over the years a growing trend in

the use of information technology to achieve results.

I think in terms of looking at excellence and what it takes to improve performance, that information technology offers in some ways

the greatest potential to leap ahead and accelerate change. Obviously it’s going to require leadership, but this, as a leadership and

management tool, I think is unparalleled. And we can see examples

in the private sector of amazing cost savings, of improvements in

efficiency, and improvements in communication and interaction.

So this has the potential not only to improve performance and results, but I think very importantly to improve the way government

interacts with and relates to the people it serves. We have actually

just completed another survey with Peter Hart and Bob Teeter on

the potential of e-government which we are going to be releasing

in just a couple of weeks, and I’ll be glad to share those results

with you. They are very interesting in terms of the way people see

the potential, and we’ve also surveyed government leaders and institutional customers as well. So I look forward to sharing that

with you, and I agree with you that this has tremendous potential

for innovation and improvement performance.

Mr. TURNER. From your own personal knowledge, do you have

any examples of perhaps States that have been a leader in using

information technology? Some time I get the impression that some

of our States have done a much better job moving forward than the

Federal Government has.

Ms. MCGINNIS. Yes, I think in States and localities, there have

been substantial leaps forward, in part because the nature of the

work, the services they provide, is more direct and more, in some

ways, like the private sector. The role of the Federal Government

in many ways is more complex and varied.

But I’ll give—a couple of examples come to mind right here close

to home. The State of Virginia has done a wonderful job in terms,

for example, of offering the renewal of driver’s licenses on-line. We

had a conference on government performance just a couple of

months ago, and when the budget director from Virginia described

this process, the whole room broke out in applause because there

are people all around the country who can see the benefit to them

in terms of time and savings to being able to conduct these transactions on-line. And there are other States which are working similarly to provide those direct services.

Mr. TURNER. Ms. Christopher.

Ms. CHRISTOPHER. Yes, I couldn’t agree more with Ms. McGinnis.

This is an important aspect of reform or change in governance. One

of our five Federal finalists this year is the Occupational Safety

and Health Association, and their program is interactive software

assessors. It’s interesting that as we did our work to find out about

this program, the industry, the private sector, is one of its greatest

supporters. It provides 24-hour access to the regulations and the

information that businesses need to be in compliance. And so this

is one example of increasing customer satisfaction and also overcoming some of the barriers that exist between sectors by providing

more access using information technology.

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We hope to see more applicants from both the Federal and the

State level. We changed one of our categories on the new application from technology to E-governance to be consistent with where

things are going. One State that has been recognized nationally is

the State of Washington for its innovations in terms of E-governance. The newest directions in the technology, the application of

portals I think holds a lot of promise, particularly for the Federal

Government in that it provides the opportunity to move beyond the

categorical and sort of ‘‘silo’’ approach to government. It provides

opportunities to cross over barriers and promote more communication and interaction between agencies around outcomes and problems that will require partnerships and multiple agency applications.

I think E-governance is clearly the greatest challenge that we

face, and I strongly commend and support your efforts to push for

an acceleration of our pace in reaching that goal to become a truly

technological advanced government.

Mr. TURNER. Mr. Doberman.

Mr. GABERMAN. Well, you know, one of the things that’s a problem for people is the entry costs in terms of technology, and not

being absolutely certain in terms of what they’re going to get for

benefits. And one of the award winners in the State of New York

in 1995 under the Center for Technology in Government actually

provided a way that local agencies and State agencies could try

various applications in a university-based setting to see what, in

fact, seems to work for them, before they had to make the actual

up-front investment. That struck me as a pretty creative and innovative way of going about it.

I think this applies not just to the Federal Government, to local

governments, it applies to the not-for-profit sector as well. And just

as a brief aside, in 1979, before the major revolution in the workplace, the Ford Foundation had something in the neighborhood of

800 staff to put out some $100 million in a budget. In 1999, the

Ford Foundation had about 600 staff to put $800 million out. And

I think it’s that revolution in the workplace in terms of the technology that allows us to be so much more efficient, so much less

costly in terms of our overhead and so much more of the money to

get out to our grantees.

Mr. TURNER. Thank you. Thank you, Mr. Chairman.

Mr. HORN. We thank you. Let me just close on this panel with

a couple of questions. One of the things we find when the Federal

Government often has a grant program, let’s take COPS as an example, that the first few years, everything is going great. The Federal Government is paying the bills. What happens the third,

fourth year? What can you tell us? Has that been also a problem

for the Ford Foundation? That it doesn’t—it doesn’t stay and move

and they just give it up after that time? What’s your experience

been?

Mr. GABERMAN. I could quickly say that this program in particular, which would be fair to call a signature program for us, has two

very important lessons. Lesson No. 1 is right on the point you’re

making, and that’s the value of sticking with a project over time.

It has been 14 years now, and if you listened a little bit to the description, this program has evolved. It started out with largely an

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awards program at State and local government. It’s added the Federal component. It’s added recognizing not just the $100,000 winners, and it’s added a component with the Council on Excellence

in Government into trying to get the message out.

So we’ve learned over time and we would not have learned had

we not been willing to stick with it. So there’s a real value there.

The second thing I might add that’s a particularly helpful lesson

for us is about the strategy of programming. Very often when conventional wisdom pushes you in one direction, it’s useful to ask

what the contrary intuitive part of that might be. And when this

program started, conventional wisdom would have had you study

failure. It would have had you write another book, commission another study, and you would have learned something, and it might

have been quite good work.

But the fact was that all over the country there were terrific examples of success. And the counterintuitive part was to say let’s

not highlight the failure, let’s highlight the success. And I think

that’s at the heart of this. And it has been a technique that we’ve

been able to apply to other programs, to look at that

counterintuitive aspect of programming strategy.

Ms. CHRISTOPHER. What we found, particularly in this year’s programs but also in prior years, is that the focus is on not just the

particular isolated programmatic approach, but it’s on a new way

of thinking about solving a problem. And we are finding that it’s

probably easier to sustain and promote this change in thinking,

this change in practice, it’s probably easier to do that than to support isolated programs.

So we are excited about what we are seeing that these programs

are now not just saying we can solve a problem, but we can also

introduce a new concept or a new way of thinking about how a

problem should be addressed.

Welfare reform, for instance, or the capacity to move people from

welfare dependency to employment, one of our earliest winners in

the State of Illinois, suggested that the approach needed to be comprehensive. It was a new way of thinking. That was almost 10

years ago, and today we find that this kind of thinking is present

in many of the innovations in terms of welfare reform.

This year’s program that deals with a new approach to foster

care placement, supporting accountability for outcomes, reducing

the amount of time that the children spend in the system, this is

a new way of thinking about what foster care should be held accountable for and it is this kind of innovation for systems change

that is emerging as result of these innovations, and these are the

kind of things that we want to promote and foster nationally.

Ms. MCGINNIS. There is no question that innovation has to be

continuous. And by focussing on some of the systemic issues that

you have chosen to focus on today, that is, measuring performance,

focusing on results, I think that enables you to look at how these

programs are doing. And if one programmatic approach is not

working, others could be substituted as long as the accountability

is there.

A particular design of a particular program shouldn’t go on forever. I mean, there is the introduction of information technology

and new approaches should be welcomed. So we would like to see

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more flexibility in the way programs are managed and administered. But a stronger focus on accountability for specific results.

And that’s the message of the innovators over the years.

Mr. HORN. Let me ask you, have you had a chance, either at the

Kennedy School or with your council, Ms. McGinnis, on terms of

looking at your programs and looking at the performance and results law of the Federal Government and what we are doing annually with Federal agencies, is there something you can give to us

at the Federal level based on your experience that maybe we aren’t

doing right, being Congress not doing it or the executive branch not

doing it? Or have you had a chance to make those comparisons or

has somebody gotten their doctoral dissertation and put them out

on that for a year or so? I know the Ford Foundation would be very

willing to help them. Anyhow, have we learned something that we

can use that we are missing?

Ms. CHRISTOPHER. I will draw from my experience with the innovations programs, but also with my experience with the National

Academy of Public Administration and the Alliance for Redesigning

Government. I think there needs to be more emphasis on genuine

stakeholder input in the planning process. We observed at the

Academy, and I think this is reflected also in the Innovations winners, that the grass-roots or frontline workers must feel ownership

and involvement and total engagement in the new vision, in the

mission that’s created. And when somehow the process of the strategic planning and the performance planning becomes a paper process that doesn’t engage and thoroughly involve all of the stakeholders, or at least the employee stakeholder, it is less effective.

What we have found is that many of the innovations programs

are able to provide incentives, be they monetary or recognition or

other creative strategies, that will engage employees with a real

sense of pride and ownership in the process. And I think if there

is a lesson to be learned at this early stage of the implementation

of the Results Act is that we do need to be more assertive and aggressive in the outreach and the documentation that the engagement has particularly taken place, that it has not been sort of a

paper exercise.

Mr. HORN. Well, that is very helpful. Any other thoughts?

Ms. MCGINNIS. Mr. Chairman, we at the Council have looked at

the strategic plans of many agencies, and this year we actually conducted sessions with 10 agency leaders, and some of our principals

who are from the private sector, to talk about their strategic plans

in an interactive way. One thing that I’ve noticed about the plans

is—and I think this is a problem, both within the executive branch

and in the Congress—the goals and objectives and priorities among

the many goals and objectives are not clear in many plans. There

are very few that have taken this step.

And in the executive branch, a problem that we see is that often

this process of setting goals and objectives and doing the planning

and reporting is not as central to the strategic planning and management of the whole agency as it could be and should be.

This is—in the Department of Transportation, on the other hand,

which we have seen as one of the best plans focussing on priorities

and measurable objectives and really using the Government Results Act process as a way of managing and bringing together the

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various transportation modes within the Department, we would

like to see that approach used more broadly in the Federal Government.

In the case of the Congress, I think the Results Act, which is a

very logical management tool, needs to inspire congressional committees to be more clear in their own goals and objectives in writing legislation. There is a lot of confusion and conflict, when you

look at the statutes, that those in the executive branches or the executive branch are working with. So there’s a need for clarity on

this side as well.

The other thing that we see is that this as a management tool

needs to be used more actively by the authorizing committees when

they’re actually designing legislation, and by the appropriating

committees when they’re deciding which programs to fund and

how.

So it is a terrific tool which is not yet being used as fully either

in the Congress or the executive branch as I think we would all

like to see.

Mr. HORN. Well, thank you for that, because we certainly agree

with you and we’ve urged our authorizing colleagues and our appropriating colleagues to meet their counterparts, Presidential appointees. Don’t let’s have staff do it; let’s sit down and eyeball each

one of these things. Otherwise, we’re not taking it seriously.

Ms. MCGINNIS. That’s a great idea.

Mr. HORN. We thank you very much and we will now move to

the second panel, and that’s Mr. Antony Sharbaugh, the director,

office of human resources, gainsharing program of Baltimore County, MD; the Honorable Allan Klein, administrative law judge, government innovations and cooperation board of the State of Minnesota; and Mrs. Biggert the vice chairman will come and introduce Mr. Jess McDonald, director Illinois Department of Children

and Family Services.

If you will stand and raise your right hand.

[Witnesses sworn.]

Mr. HORN. The clerk will note that all three witnesses have affirmed. And we will begin in the order that we have put it in the

agenda. And that will mean Mr. Sharbaugh, the director, Office of

Human Resources, Gainsharing Program of Baltimore County, MD.

STATEMENTS OF ANTONY SHARBAUGH, DIRECTOR, OFFICE

OF HUMAN RESOURCES, GAINSHARING PROGRAM OF BALTIMORE COUNTY, MD; ALLAN KLEIN, ADMINISTRATIVE LAW

JUDGE, GOVERNMENT INNOVATIONS AND COOPERATION

BOARD OF THE STATE OF MINNESOTA; AND JESS McDONALD, DIRECTOR, ILLINOIS DEPARTMENT OF CHILDREN AND

FAMILY SERVICES

Mr. SHARBAUGH. Mr. Chairman, Mr. Turner, I come here as the

director of the Office of Human Resources for Baltimore County. I

have been charged by our county executive, Dutch Ruppersberger,

with ensuring the success of the Gainsharing Program. I would like

to thank the committee, the Ford Foundation, the Kennedy School

of Government, and the Council for Excellence in Government for

the opportunity to make some brief remarks about our program.

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Gainsharing can be defined succinctly. Empowered frontline employees streamline bureaucracy to improve productivity. Some examples: A street lighting crew in Baltimore County leads 10 other

local jurisdictions to challenge a Maryland power company. The

company proposes a tariff that would virtually eliminate competition in the area of street lighting and cost our local government an

additional million and a half dollars per year.

Building custodians solicit help from a recycling staff to promote

the cost savings and environmental benefits of hand dryers over

paper towels.

A team of tradespersons research and identify the inefficient use

of high priced drywall and recommend a cost-effective solution.

Gainsharing helps employees to realize that their efforts can

make a difference. It encourages them to become proactive; to not

only identify problems, but to offer solutions. Without gainsharing,

the examples cited would not have occurred. The program is more

than an alternative pay for performance system. It is a catalyst for

a culture change, a change toward participatory management.

A variety of factors led us to develop this program. With a population approaching 800,000 and flattening tax revenues, we were

faced with an increasing demand for services and limited resources

to meet them. Compounding this dilemma, many employees had

been laid off, the morale of those who remained was low. Some of

the best and brightest were jumping ship. Most employees believed

that they had no control over their jobs, their careers, or their future.

We looked for a strategy that could potentially reduce government costs, raise competence, promote efficiency and independent

thinking, and please taxpayers with the potential of improved service.

Our program recruits frontline employees to save money, improve customer service, and boost morale. The strategy calls for

workers to voluntarily participate in management and accept responsibility for major reforms. In exchange for crossing management’s line, employees split any generated savings with our county.

For the first time in a major suburban government, managers

share power with frontline workers to improve the system.

The program starts by retraining supervisors and administrators.

Once they understand our focus, small teams of employees are selected by their peers. These teams are supported by the facilitators,

generally frontline workers themselves, steering the teams to maximize their potential. The teams work independently with few restrictions to the scope of their ideas. They have the authority to enlist management’s assistance when needed. They research cost savings proposals, evaluate them, determine feasibility and package

proposals persuasively for presentation to top county administrators.

The team goal is to save money by bringing its knowledge, insight and experience to bear on problems. Whatever a team saves

is divided equally with the administration for 2 years. Moreover,

the teams exercise authority over the payouts determining who

should be rewarded or excluded, and assume discretionary power

normally reserved for management.

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Many benefit from gainsharing. The citizens receive better service. In the short run, employees receive cash when their proposals

are proven. In the long run, they profit from the process, learning

team skills and experience autonomy over their jobs. Management

wins from this alliance, as the organizational impetus moves from

an authoritarian to a cooperative principle. Employees now create

solutions, not problems. They become shareholders, understanding

how waste and poor quality directly affect their security and income.

Our program has been well received, and its by-product has been

a positive press with mention in the Wall Street Journal, the

Washington Post, and inquiries from State and local governments

across North American. The Gainsharing Program can confidently

be duplicated in any jurisdiction. Many of its guiding principles

adopted wholly or in part from Total Quality Management, have a

proven track record of adaptability. Team problem solving has been

successfully exported to private and public institutions across our

country.

The program overcomes many budget limitations. While there

are startup investments, it pays its own way producing long-term

savings that are initially shared with the employees, but then continue unencumbered. Gainsharing has a built-in mechanism to diffuse employee resistance often encountered in experimental strategies. It does not force employees to change. The program is voluntary. It builds on the enthusiasm of a few and grows naturally

in its success.

There are obstacles, of course. The program demands commitment from both the political administration and management. It

requires that genuine leverage be ceded to participating workers.

They must be given access to organizationally knowledgeable managers who are often reticent to share authority. These managers

may feel threatened. Care must be taken to show them that they

still add value to the organization; however, their roles have

changed from simply telling the employees what to do to guiding

and encouraging each employee to develop their potential. Unions

can be won over by involving them early in the process and seeking

their input throughout the program, especially in a review capacity.

Our Gainsharing Program builds on the successes of many existing practices by combining them into a unique package. It is not

TQM or Group Dynamics tripped out in new clothes, but rather a

major innovation applied to a large county government. It is an effort that calls on the skills and commitments of hundreds of employees and makes demands on administrators as well as frontline

workers and is redefining the scope of everyone’s position in the

new organization. Thank you.

Mr. HORN. Thank you very much.

[The prepared statement of Mr. Sharbaugh follows:]

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Mr. HORN. We now move to the Honorable Allan Klein, administrative law judge, Government Innovations and Cooperation, Board

of the State of Minnesota.

I found that a rather fascinating operation. Are there similar offices in other States than Minnesota?

Judge KLEIN. Not that I’m aware of.

Mr. HORN. It is a very unique operation.

Judge KLEIN. Thank you. It is a joint executive-legislative operation which has some members from the legislature and some from

the executive branch, and I’ll describe in a moment what it does.

But, Mr. Chairman, members of the committee, my name is Allan

Klein, and I am here not because I’m the best representative of our

group perhaps, but because I’m the sole remaining member of the

original board that first met back in 1993. And as you know, seniority has its benefits.

When I was listening to the first panel speaking, I realized that

the easiest way to understand the Minnesota board is to view it as

a miniature version of the Innovations program. Barry Gaberman

talked about four objectives being recognition, replication, learning

and visibility. And I realized that those were the objectives of the

Minnesota board as well because we fund projects and then we

publicize them to encourage replication. The similarities between

the two programs are striking.

The Minnesota board of Government Innovation and Cooperation

is designed to enable and empower local government units such as

counties, cities, towns, school districts, special purpose districts,

etc., to overcome barriers to innovation. And the overall goal is to

promote the mindset, much as Ms. McGinnis spoke of early on, promote the mindset that government can try new things, and that

the State does encourage them to try new ways and, indeed, will

help them legally and finally to try new ways.

The barriers to innovation are well-known. There are laws and

rules that often mandate what must be done and how it must be

done. Often they prevent any other way of doing things.

Second, there are risks with innovation. There are startup costs.

Where is the money going to come from? And there are political

risks as well. Will your opponent remind you of the failures during

your administration? And the easiest way to avoid these risks is

just do things the same old way as they have been done in the

past. You know it works, and you can’t be criticized for spending

money on something that doesn’t work.

There are three ways in which our board attempts to overcome

these obstacles. First of all, we offer financial grants to local units

of government to help them plan and execute innovative ideas.

These work like seed money, or as some now say, ‘‘Ventura capital’’

investments, so that the locals can have the money for the startup

costs. A good example of this is a joint State-county and city vehicle

repair facility which is described more fully in my written statement.

Second, the board is empowered to grant waivers to State statutes and rules that are obstructing local governments from trying

new ideas. Often we have statutes and rules that not only tell

locals what to do, but also tell them how to do it. We all know of

cases where government officials have told us that they could have

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achieved the same outcome so much more cheaply or so much more

effectively if they could have used a different method to get there.

And we offer flexibility by granting waivers to statutes and rules

to let the locals test their ideas on a pilot project basis.

If we find that their plan does work better than the old one, then

we go to the legislature and encourage the legislature to change

the statute, or we go to the agency and encourage the agency to

change the rule to allow for the better method. That’s the second

tool that we use to encourage innovation.

The third and final method is a traditional one, it’s to encourage

and help fund the actual merger of cities and towns or school districts or other units of government. Now merging two cities or

towns is a complex undertaking. I don’t have to tell you it’s complex politically. But I can also tell you that it is complex financially

and complex legally. Just studying and presenting all the various

questions and answers before the decision is made is a task that

stops many mergers in their tracks. The board helps fund consultants, for example, to identify issues and propose solutions even before the decision has been made. And if the merger does proceed,

then the board will help fund the myriad costs actually incurred by

the two local units of government as they undertake actual implementation.

So those are the three methods that we use to encourage innovations. We make startup money available through grants, we help

work around statutes and rules by granting waivers, and we encourage and help fund mergers.

And the point of all of this is to get across the idea that it’s OK

to try new ways, and it’s the goal of the State to help local units

of government find better ways to deliver those services.

The Minnesota board would be happy to explain any of these programs more fully to persons from other States or the Federal Government who might want to consider them. And I think at that

point I’ll close. There are some examples in my written statement

of all the various types of things we’ve done.

One thing I might just mention, Representative Turner asked

earlier about information technology. And there’s an example in my

written statement of a waiver which we granted to Hennepin and

Ramsey Counties. Now those are the two largest counties in the

State, the cities of Minneapolis and Saint Paul. They are the counties that have the most significant populations of undereducated

persons. And as you may know, the Federal Government mandates

that every 6 months, medical assistance recipients verify the fact

that they are still eligible for medical assistance in terms of their

income.

And prior to our waiver, roughly 25 percent of the medical assistance recipients in those two counties temporarily lost their benefits

because they failed to return their forms. We would send them out

a form, they should fill it out and they should return it. But as

high as 25 percent of the people did not return it. They lost their

benefits. This caused not only problems for them when they needed

medical services, but it also caused problems when they had to reapply and get requalified.

And somebody in Hennepin County came up with an idea. They

realized through their experience that most of these people were on

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fixed incomes, and most of them got their only money from Social

Security. They did not have outside investments or anything like

that. Wouldn’t it be possible to somehow electronically verify the

amount of their Social Security payments, compare it with the limits for medical assistance, and the vast majority of them were still

going to qualify, and thereby we could eliminate the problem of this

every 6 months sending out the form but not sending it back in?

And so we granted them a waiver from a State rule that said you

had to use the form, and instead allowed an electronic verification

of their Social Security benefits. It worked out to be tremendously

successful, avoided all of these people losing their benefits every 6

months, and now the legislature has authorized any county in the

State to try this system. So there is an example of where information technology was put to work to solve a really basically human

problem of simply not getting the forms returned on time. But with

that, I’m going to stop. Thank you.

[The prepared statement of Judge Klein follows:]

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Mr. HORN. Well, we thank you. That’s a very interesting approach. A group of freshmen approached us last year and said once

HHS, let’s say, makes a waiver for one State, why shouldn’t they

make it for all States? Now, you made waivers in certain conditions. Should you make a waiver across the State?

Judge KLEIN. If it’s successful. The whole point of these is pilot

projects, to see if this new system works. If it does work, yes, then

the agency should change the rule that says you must send in a

form every 6 months and say you can either send in a form or use

this alternative method. What we want to do is fund pilot projects,

essentially, or make waivers for pilot projects and see if they work

first.

Mr. HORN. Our Vice Chair, Mrs. Biggert, the gentlewoman from

Illinois, is here, and I know she would like to introduce Jess

McDonald, the director of the Illinois Department of Children and

Family Services. The gentlewoman from Illinois.

Mrs. BIGGERT. Thank you, Mr. Chairman. It is really a pleasure

to see the director of the Department of Children and Family Services, Jess McDonald, who I had an opportunity to work with for 6

years while I was in the State legislature, and can attest to the

changes and the improvement of DCFS that he has made, not only

in the adoption and child care issue, but the whole agency, and

taking an agency that had some real problems and really making

it one of the finest, I think, in the country.

And prior to DCFS, serving as the director of the Mental Health

and Disabilities Agency, and then moving into DCFS. So I am excited to hear what he has to say, and having worked with him, I

think, with him on the legislation that really established the best

interest of the children. I think that was the starting point from

which a lot of this went forward. And rather than the parents, but

really what should be decided is the best interest of the children

and moving to this. And then to your initiative on the permanency

has really done so much for the State of Illinois. And a State that

the agency is huge in comparison to other States. And it’s like a

microcosm all of its own. And what you have been able to do I really applaud you for, and welcome you here today.

Mr. MCDONALD. Thank you. Mr. Chairman and members of the

committee, I’m Jess McDonald, director of the Department of Children and Family Services in Illinois. We have an expression: Illinois’ child welfare system has gone from worst to first. And the lesson that we generally say to everyone else is: Don’t go where we’ve

gone.

There is no pleasure in having dramatic success if it comes at the

expense of having years and years of not having the performance.

The Illinois general assembly consistently was asking the questions

how do you get better performance?

How do we get children cared for safely? How do we get the right

decisions and right outcomes with regard to investigations around

abuse, negligence; and how do we get kids into permanent safe

homes as quickly as possible?

In the last 4 years because of the Illinois Permanency Initiative

and supported by the Adoption and Safe Families Act and major

reforms in Illinois, court reforms seeking accreditation for the entire system, lowering caseloads, we’ve managed to achieve over

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21,000 adoptions from foster care; in addition another 5,000

guardianships. Our caseloads have dropped over 40 percent in just

3 years due to improvements at the front end and the adoption successes. But performance contracting was the engine behind—that

led the change here.

We really need to introduce into everyone in the system that we

had to focus on outcomes, we had to have clear strategies to

achieve them, and those outcomes had to be the best interest of the

children.

How do you get children into permanent settings? All the financial incentives at the Federal and State level would appear to keep

children in care, to keep children in foster care and allow them to

languish there. We had to figure out what were the obstacles. Performance contracting first had to sit around the table and look at

the information around the system. Technology helped us look at

the data on the system, the data on the agencies. We set aggressive

goals for performance by agencies, public and private, and said the

only thing that mattered is whether or not an agency could meet

the goals on behalf of children. It wasn’t public or private. It was

performance that mattered.

We knew we had to invest in capacity. There had to be lower

caseloads. There had to be assistance in adoptions. There had to be

resources for unifications. And we put the investments in up front

with the recognition that there would be savings within the same

fiscal year. We had to align financial incentives so that agencies

had an absolute incentive to move a kid to adoption or return them

home safely, rather than to keep a child in care. And it made a

huge difference in how agencies performed. Agencies that had no

adoptions in 1 year had a 25 percent adoption and permanency

rate the following year because they saw that they would not go

out of business by getting children placed safely into adoption or

reunification.

The performance contracting issues and initiative allowed us to

make—to realize the promise of permanency legislation, of court reforms and of general improvements in case work process, but unless the incentives were aligned at all levels and that all managers

in the public and private sector focused on performance, we were

not going to get performance. People had to understand exactly

where their agencies were.

The result actually was quite dramatic. In 2 years we saved over

$40 million directly attributable to the performance contracting.

The changes that were initiated years before when Mrs. Biggert

and others were looking at reforming the child welfare system had

resulted over a period of 5 years of around almost a half a billion

dollars in savings and cost avoidance. But performance contracting

was the engine for the change, and what we learned was that until

you get people sitting around the table looking at the focus on outcomes, and looking at the obstacles, and building capacity to get results, and aligning incentives to get outcomes, and encouraging reinvestments to get even lower caseloads, you are not going to get

the kind of results that I think every legislative body in every Governor’s office demands out of the child welfare system.

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More importantly, the children in this system and the families

that are served by it need to make sure the system has the ability

to deliver on the promises that have been put in place in statute.

Innovation in child welfare is not only possible, it is absolutely

vital, and the Federal and State focus on outcomes demands new

ways of doing business at all levels. That means at the Federal

level we are going to have to look at why it is that our Federal financing, in fact, encourages long-term foster care; that, in fact, we

do not encourage innovation because we limit the number of waivers, and we do not allow successful waivers to be replicated in

other States. It is absolutely vital that at every level of government, especially in child welfare and human services, that innovation be encouraged. Thank you.

[The prepared statement of Mr. McDonald follows:]

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Mr. HORN. The gentlewoman from Illinois would like to begin the

questioning. Let’s say 5 minutes for each of us, and we’ll make a

round until we get it done.

Mrs. BIGGERT. Thank you, Mr. Chairman.

Mr. McDonald, certainly it’s such a laudable program. I just wondered if there’s any unintended consequences resulting from your

program? And second of all, are there any more improvements that

need to be done to the program, and is that—is there still any impediment from the general assembly or from the Federal Government or whatever?

Mr. MCDONALD. Well, the greatest risk that people feared with

performance contracting is that it would be—it would have the

HMO look. In fact, the whole approach was designed to meet the

requirements of children, and when you have a juvenile court that

makes judgments about whether or not adoption is appropriate, it

is virtually every case plan, every case decision was signed off on

by the juvenile courts.

Our rate of disruption, which is one measure of performance in

adoptions, is low, has remained low. When you consider that we

had a median length of stay of 5 years, we had kids that were sitting in foster care waiting for someone to ask the question, you

know, do you want to adopt this child, do you want to be a family

forever? So we have not found—and we are routinely researching

the effects of our guardianship waiver and our permanency program generally, and we’re finding no ill effects at all. As a matter

of fact, we now have more kids in active adoption and guardianship

cases than all of the foster care and residential care. And we’ve had

growing support for our postadoption services.

There will be challenges in the child welfare system in the future

to build appropriate postadoption services, but we have found that

performance contracting and all the other reforms, including requiring the State system to be an accredited system, and our agency is now accredited, means that you have higher quality, but

alongside higher quality you have to insist on better improvements

in performance.

Mrs. BIGGERT. Thank you. As I recall, when we were doing the

reform and the agency was at its worst, that there were kids falling

through the cracks or being left in homes that were abused. Has

there been a change in the case workers? Are they better trained,

or is their outlook better? It seemed to be there was this negative

feeling, or they were really down as far as what their jobs were

about.

Mr. MCDONALD. Actually the philosophy at the time was the

beatings will continue until performance improves. It doesn’t lead

to improved performance. Accreditation required us to change our

ranks of supervision so that we had professionals in supervision. It

provided for a major change in our quality improvement approach

so that we would find problems quickly and make dramatic

changes if necessary. Training was improved significantly. As a result, if you check with our staff now, you can ask the union, you

can ask the private agencies, the work is more difficult than it’s

ever been, but the conditions are the best they’ve ever been.

The expectations in child welfare continue to increase. They are

not diminishing because of, I think, necessary and appropriate pubVerDate 11-MAY-2000 08:52 Aug 27, 2001 Jkt 000000 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 C:\DOCS\74332.TXT HGOVREF1 PsN: HGOVREF1
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lic scrutiny, but I think we’re getting our safety results because the

risk assessment program that the Illinois General Assembly put in

place when you were there has resulted in a 60 percent reduction

in subsequent reports of abuse, so seeing kids treated in a way in

which they are allowed to stay at home without the risk—without

a safety risk.

Mrs. BIGGERT. And how about with the relatives that have become the foster parents? Have there been any cases where—going

back to the original parents?

Mr. MCDONALD. Well, actually the kinship care is an interesting

problem. It is, in fact, the backbone of the Illinois foster care system. Illinois law gives absolute preference to relatives, and we provide the relatives—we encourage them to be licensed. Most of them

are. Fifty-seven percent of our adoptions are to relatives and our

Illinois law does not permit someone to just make a private arrangement in order to get increased resources. This is where we

truly take protective custody and need to find homes.

We have found that the adoptions that are consummated

through—and guardianships—through kinship care are stronger

through regular foster care. There may, in fact, be an open adoption with regard to the parent, but we have not found any examples so far where the guardianship was—where they actually returned the child themselves to the parent.

Mrs. BIGGERT. I think that was always a concern that there

might be that arrangement that would not be known where they

were really going back to the original parents. So that’s good to

hear.

I think then, Mr. Klein, how can the Federal Government support programs such as yours? What can the Federal Government

do?

Judge KLEIN. Well, this is a huge topic, but sometimes State programs are limited substantially by Federal rules and regulations,

no question about it. And to the extent the Federal Government

could offer some sort of a method to try pilot projects—a method

that provided some sort of review of a waiver request that was perhaps independent and separate from the agency itself, that might

be of some help.

In other words, EPA is one that I have some particular knowledge of just because I do much of my work in the environmental

field, and they have some fairly strict rules that all States are required to follow, and there’s very good reason for those rules. I’m

not saying there isn’t. But if you want to get a waiver from those

rules, how can you do it? If you go to EPA, maybe you’re going to

run into some resistance, but if you had an independent place

where you could go, like the Minnesota Board, for example, that

doesn’t have any sort of ownership of that rule, you might be able

to foster more innovation.

Mrs. BIGGERT. Thank you.

Thank you, Mr. Chairman.

Mr. HORN. We thank you. And now turn to the ranking member,

Mr. Turner, the gentleman from Texas; 5 minutes, 6 minutes.

Mr. TURNER. Thank you, Mr. Chairman.

Judge, just to followup on what you just said. I’ve served in both

the State legislature in Texas and now here in Congress, and I’m

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always struck by the stark differences in what you can do in a legislature versus here in the Congress. And we have a strong executive form of government in the Federal Government. The executive

branch, whoever is in power, jealously guards it. And in the legislatures you more often see the possibility of doing the kind of thing

that you apparently have successfully done in Minnesota.

I notice in looking at your board and its 11 members, 6 of the

members of the board are legislators. I doubt you could ever pass

anything like that—you can pass it through the Congress, but I

doubt you can get it past a White House, no matter who is in

charge over there, so we have a little more difficulty. And I can see

how it was fairly easy to pass such an initiative with the legislators

being the majority of the board.

But it does offer, I think, some challenge to us to figure out a

way to do exactly what you mentioned a minute ago, and that is

how do we allow waivers. I mean, the agencies at the Federal level

can grant a waiver. In my experience, it might take you a year or

2 to get one.

I was curious when a local entity asked for a waiver from your

board, what would be the average time it would take for you to review it, and what would you require in order to make a decision

that you would grant the local agency a waiver?

Judge KLEIN. In response to the time period, it’s about 90 days.

When we get a waiver request, we immediately send it off to the

agency whose rule is sought to be waived and say, we would like

to have your input on this, and we would like to have that within

30 days. If they agree with the waiver, or if they negotiate something with the city or town, that may be the end of it. If they disagree with the waiver, we then set the matter on for a

minihearing. I don’t want to make that sound too formal, but essentially we get the board together, and we get the applicant and

the agency to appear before us, and we give them about 20, 30

minutes, something like that, each, and then we ask questions, and

we decide. And that’s about it.

So I would say 90 days is approximately the time. That’s for a

contested one. Many of these things end up being negotiated. And

I think there’s something to be learned here. The mere existence

of somebody who can grant this waiver over the objection of the

agency causes the agency, I think, to be a little bit more flexible.

Maybe the agency doesn’t want us to grant a waiver, and so before

we even get a chance to vote on it, the agency—has negotiated

something with the party that preserves the agency’s real concerns

plus gives the party something of what they want. It’s sort of a mediated settlement without any participation by us. But I think the

mere presence of having somebody there who can do this causes

the agency to be a little more flexible.

Mr. TURNER. Now, you have the authority to grant a waiver to

one local governmental entity?

Judge KLEIN. Correct.

Mr. TURNER. You don’t have the authority to grant it statewide

or to a multitude of entities?

Judge KLEIN. No, because, again, getting back to the chairman’s

initial question, these are designed to be pilot projects essentially.

And, in fact, what has happened sometimes is that we will grant

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a waiver—in 1996, let’s say, we grant a waiver, and the word gets

around to cities and towns that, hey, finally somebody found a way

around that problem. They come in the next year, in 1997, and we

might have five applicants for the same waiver. And we will often

say ‘‘no.’’ We want to let this first one have some time to run, see

whether it works or not, and then the solution is not to have us

granting waivers to every city and town around, but instead to get

the agency to change the rule.

And part of the benefit of having those six legislators on the

board is that those six legislators know how to get the agency to

change its rule, and if the agency doesn’t do it, they’ll do it for

them.

So we try very hard not to grant repetitive waivers of the same

thing. The idea is do it as a pilot project, and if it works, then

change the underlying rule or statute.

Mr. TURNER. I notice not only do you have the authority to waive

an agency rule, but I believe I read that you have the authority to

waive a procedural law. Give us an example of what kind of law

that means you can actually overrule? Have you done that? It

seems like that is certainly an additional and unusual power for a

State board to have.

Judge KLEIN. It is unusual, and as you can imagine, the legislature has put strict limits around how it is exercised. First of all,

it has to be a procedural statute. It has to say something about

how something is done rather than what gets done. Substance, we

cannot waive. And, in fact, we have turned down a number of waiver requests because we perceive that what they’re really asking for

is a waiver from the substance of the statute, and we can’t do that.

We can do procedural waivers.

And there are other limitations, the most interesting one of

which is that the statute specifies that the waiver must expire at

the end of the next legislative session after it is granted unless the

legislature chooses to extend it. And so what happens is we have

every year a bill that we put before the legislature saying here are

the waivers we have granted. Here are the ones which would still

like to continue because the pilot project isn’t done, and we either

recommend that you do approve the continuation, or we don’t recommend that you approve the continuation. But the control is always with the legislature, and if, in fact, the legislature doesn’t act

on that bill for whatever reason, the waivers terminate.

And I’m sorry to say that I can’t off the top of my head give you

a good example of a statutory waiver. I know there have been

some. I just can’t think of one off the top of my head.

Mr. TURNER. Thank you, Judge.

Thank you, Mr. Chairman.

Mr. HORN. You’re welcome. And if you think of that, just write

us a letter, and we’ll put that in the record at this point.

[The information referred to follows:]

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Mr. HORN. I just have a few questions that you heard of the first

panel.

What can you tell us about the qualitative and quantitative implementation of various programs? What’s your experience? And

did that seem to please the legislature? And I would be curious,

Mr. McDonald, also the degree to which you changed the compensation that your staff had. And if so, how far down did you go

in terms of managers and executives under your direction? Can you

give us a feel for that?

Mr. MCDONALD. On the first part, the general assembly and the

Governor’s Office have been very pleased with the results in that

we controlled a budget that was experiencing, you know, 20 to 30

percent annual rates of growth. We’ve been in essentially for the

last 4 years a flat budget, but we’ve been able to make reinvestments from savings into improving work conditions. Agencies that

operate in—public and private agencies—are able to reinvest the

savings we give to them into better working conditions, and if they

choose, they can increase salaries. So we give them a great deal of

discretion.

Our own employees are governed by the State civil service system and payroll, but we tend to pay pretty well in terms of how

are staff—how staff are recognized for compensation purposes in

child welfare.

Generally speaking, on the issue of quality, one of the things we

found from performance contracting is that the quality of services

to children improve not just in terms of outcomes, but also in terms

of—one of the issues is how often do foster children move. The

myth was—not the myth. The reality was they were moved many,

many times during the course of the year. That means they generally fail in school, and they have other problems. Stability issues

in foster care improve dramatically. The movement was cut in half

in the first several years of contracting, as agencies had the incentive to do the work right with every child if they were going to

achieve the right outcomes.

Mr. HORN. Did you have major problems with the professional

welfare workers who, as you say, the goal seemed to be just put

them someplace?

Mr. MCDONALD. Well, we actually—we had some interesting discussions with the union. We explained that performance requirements were going to apply to everyone in the business. That included our own employees. And agencies that did not meet the performance bar would lose their contracts. And we said that would

apply to our own staff. Caseloads would leave our own offices. That

means we would actually downsize some of our own operations. We

had—about a year and a half ago, we downsized teams, which is

over 100 employees, in one of our offices because they didn’t perform as well as other folks on behalf of children. The union that

came in, instead of arguing about whether we could do that, they

said, what do we have to do to perform better, because they understood the terms of the contract. And a number of agencies have lost

their contracts because they did not perform well. The focus has

been on performance on behalf of children.

Mr. HORN. Well, that makes a lot of sense.

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Now, for your own administrators, did you sort of put them on

a 6-month goal-setting or a 1-year goal-setting and relate the compensation to their achievement of that?

Mr. MCDONALD. Unfortunately we have very narrow frameworks

with which we can do that, but to the extent we have a range of

between zero increases and perhaps even career counseling to 5 or

6 percent increases, we’ve taken advantage of that. Where managers—not just managers, but supervisors and middle managers

have contributed to good outcomes, we’ve used every existing leverage piece we have to reward them.

Mr. HORN. Have other States come to you and said, how did you

do it? We would like to do it.

Mr. MCDONALD. Yes, we do get rather frequent calls about it.

And I am going to be honest about this. We say, first of all, we had

a long period of time of building a large problem. We say, the first

thing is don’t go there. Don’t let your system slide into a serious

state of disrepair. A lot of large urban systems are there and are

going there, but they’re also making recoveries. Nick Scarpetta in

New York City is doing a marvelous job. In Cook County we’ve

done a great job with the cooperation of courts and private providers. But we’re saying every State is different in terms of the mix

of laws, the mix of providers and so on, but the one thing that is

common is that the expectation is now around performance and results, and that much of what we’ve been through is, in fact, an appropriate lesson for other settings.

Mr. HORN. Is the Governor trying to those similar procedures

and outcomes in terms of performance and results?

Mr. MCDONALD. The Governor’s Office has an Office of Performance Management, and that all State agencies are going through

essentially performance reviews required to establish performance

and outcome measures for their own organization. And it’s no surprise that most of what government does is measured by process

and activities and inputs as opposed to outcomes. This is changing

the way that all State agencies are looking at doing business.

Mr. HORN. To your knowledge, is the State doing any of this in

relation to the educational structures of State level and local level?

Mr. MCDONALD. Education is not under the Governor, but the

general assembly and the Governor and the appointed State board

of education has had a performance approach to education for quite

some time. In Illinois, just like in many States, where people are

looking at report cards and such, I think—and here I’m totally out

of my league except that we represent 20 percent of the kids in the

Chicago school system, and we know that unless there are improvements at a local level, they don’t do well. And I’m held accountable

for how well they do in education. So it takes some fairly creative

approaches in education to deal with some of these problems.

Mr. HORN. I might add to some of the first panel, if you have

anything to comment on that, just join us and take a microphone

because I’m particularly interested in the education bureaucracies.

They’re overwhelming, and they have wrecked more school systems

than I can think of in America. So I would just hope that some of

your very fine grants that sort of hold a carrot out there would be

applied to the public education system. I think the mayor of Chicago now in Cook County does have an office of education and cerVerDate 11-MAY-2000 08:52 Aug 27, 2001 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 C:\DOCS\74332.TXT HGOVREF1 PsN: HGOVREF1
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tainly worked toward—he’s willing to take responsibility. It sounds

like a good idea.

Mr. MCDONALD. Mr. Chairman, they’ve made dramatic improvements in the last 5 years in the city of Chicago, and since the general assembly gave the mayor more authority over the school system and its leadership, there has been dramatic turnarounds.

Mr. HORN. What is the standard they apply to your foster care

people, their attendance at school or what?

Mr. MCDONALD. Attendance is an issue, whether or not children

read at grade level, whether or not their math is at grade level.

And we routinely evaluate with the Chicago schools those issues.

We have joint attendance initiatives because attendance is a huge

issue with kids in foster care because of health reasons. We have

about 35 initiatives with the Chicago public schools that deal with

what is a huge problem in the schools as well as in the child welfare system.

Mr. HORN. How about the Federal Government? Is there any

part of the HSS and Federal welfare that held you back from doing

this?

Mr. MCDONALD. Well, I would say that one of the things that the

committee may want to take a look at is the extent to which current Federal funding streams encourage innovation. In fact, in

child welfare, 4(e), the Social Security title that funds adoption and

foster care, tends to have disincentives to the right outcomes. It’s

really structured to keep kids in care. The waiver program that

was put in place has restrictions of only 10 per year.

We have two 4(e) waivers for demonstrations. The first one is the

guardianship waiver; has been highly successful, and almost no

other State is able to replicate it. Frankly, they should permit replication because you would see dramatic improvements in other

systems that are interested.

We submitted a third waiver, and we’ve been told we are the

only applicant for a waiver in this last year, and we’re in discussions that may go on for a while. But the fact of the matter is that

there is a history of waivers working in welfare reform and in Medicaid reform, and I think they should be in all areas. The committee may want to look at what’s been the story on innovation

through waivers and how can you encourage a more flexible and

speedier response by the Federal Government for requests by

States to innovate.

Mr. HORN. It sounds like they’ve been supportive of that.

Mr. MCDONALD. They have been. They have been supportive of

us, but we’re not the only State with a child welfare system in

trouble. If we’ve declared the foster care system in the Nation to

be in trouble, then it would seem to me that there should be a

sense of urgency around innovation.

Mr. HORN. Anybody want to add to this since I did open up education?

Ms. CHRISTOPHER. I would just like to say that the State of Kentucky was a winner of the awards program for its comprehensive

reform focused on outcomes and results. And some of the factors

that contributed to their success was the stakeholder engagement

and a strong legislative and political base that allowed the reform

to have longevity; that no matter who came into elected office,

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there was a strong partnership and stakeholder support for this reform process. And teachers and schools and parents were all engaged around accountability for results in terms of student improvement.

This year one of our finalists is the Minnesota charter school legislation, and I’ll note that the focus is on the legislation that enabled the charter school process. Again, it picks up one of those

themes I mentioned of introducing competition into the system.

Now, of course, this is a hotly debated question, but the fact is that

when the competition is there, it sometimes stimulates more creativity within the system itself, and that’s what we’ve found as

we’ve looked at the charter school replication around the country.

It’s not only offering alternatives, but it’s also stimulating better

outcomes within the public school system itself.

Mr. HORN. That’s very helpful. I’m glad we asked the question

and you responded.

Does the gentlemen from Texas have any further questions?

If not, let me thank the staff on both sides that helped with this

very interesting topic: J. Russell George, staff director and chief

counsel; Earl Pierce, to my left, a staff member with responsibility

for this hearing; Bonnie Heald, director of communications; Brian

Sisk, clerk; Elizabeth Seong, staff assistant; George Fraser, intern,

minority staff; Trey Henderson, counsel; and Jean Gosa, minority

clerk; and our two faithful court reporters, Joe Strickland and Colleen Lynch.

We thank you very much. And with that we are adjourned.

[Whereupon, at 11:36 a.m., the subcommittee was adjourned.]

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