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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

  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

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
74-332                     WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana

                      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               JIM TURNER, Texas
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
GREG WALDEN, Oregon                  MAJOR R. OWENS, New York
DOUG OSE, California                 PATSY T. MINK, Hawaii
PAUL RYAN, Wisconsin                 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

                            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

 
  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 grant-
issuing 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.
    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.
    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 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 
appeared 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 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?
    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.
    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 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 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 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.
    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.
    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 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 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 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.
    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 public 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 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 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.
    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 certainly 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, 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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