The Government Performance Project Grades the 50 States: Has the Budget Crisis Hurt Citizens Who Depend on the Services of State Governments

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Government Performance Project releases Â?Grading the States 2005,Â? the nationÂ?s only comprehensive, independent analysis of how well each state is managed.

State governments have shown mixed success in weathering the worst financial storm since World War II in which plunging revenues have coincided with surging costs. Some states have been successful in figuring out how to deal with the crisis while others have struggled.

This conclusion is based on research released today in the Government Performance Project’s (GPP) “Grading the States 2005,” the nation’s only comprehensive, independent analysis of how well each state is managed. The new GPP report provides state-by-state information, analysis and tools to compare each state. All 50 states received grades in the GPP’s report, which can be found on and in the February issue of Governing magazine. The project is funded by The Pew Charitable Trusts.

The report grades the states in four categories – Money, People, Infrastructure, and Information – on a scale of A through F. It is designed to show leaders how to identify their state’s strengths and weaknesses and how to compare their performance with other states.

Because management and outcomes are linked, the management of state government is especially important in tight fiscal times. And since the states are taking a larger role in executing domestic policy, neglecting sound management practices may affect the delivery of vital services to citizens, the report said.

According to GPP Director Susan Tompkins, the quality of management performance by state governments is often critical to the success of a state’s programs and policies. “The last few years have seen the biggest financial crisis for state governments in 50 years,” said Tompkins. “The way a state has reacted to this crisis managerially has had a big impact on citizens and will for years to come.”

The project, the result of more than a year of research by a team of academics and journalists, found that states are trying to balance their books with a range of spending cuts, efficiency measures, borrowing and revenue-boosting strategies, but are still faced with structural deficits.

Despite the financial constraints, there are many positive initiatives in state government, the report said. It highlighted Virginia’s excellent financial management, Georgia’s ground-breaking human resources policies, and Utah’s continuing success in maintaining its infrastructure.

In its research, the project used an extensive online survey ( filled out by designated state managers; a systematic analysis of public documents, and interviews with legislators and executive officials, independent citizen groups and academics. The assessment criteria were updated from previous surveys to reflect the results of good management, not simply a dedication to process. (Note to journalists: please see methodology below for detailed information on process).

In managing their money, most states have tried to balance the books by cutting funding to government in ways that risk long term damage. The report went on to say that many have tried hard to avoid using accounting gimmicks.

Several states, however, used stop-gap measures to square their books, the GPP found. New Jersey borrowed $1.9 billion to balance a $28 billion budget last summer, a tactic that prompted the State Supreme Court to rule that the state may not do it again. Tennessee’s governor transferred 9 percent of the state’s highway money to the general fund and deferred its replenishment.

The GPP found that states vary widely in their approach to long-term financial planning. Virginia decided in 2002 that having six-year budget forecasts was so important that the state mandated doing so. But Massachusetts has a $3 billion structural budget gap because it cut taxes in reaction to an unsustainable spike in revenue during the 1990s.

Massachusetts might have been able to avoid the problem if it had a formal long-term planning mechanism that would recognize when revenues are not liable to recur, the report said.

The most serious challenge states face in managing people is the approaching retirement of many employees, an event for which some states are ill-prepared.

In more than half the states, one in five employees will be retiring over the next five years. In Tennessee, the proportion is 40 percent, and Maine and Nebraska are close to that, researchers found.

Some states are taking the problem more seriously than others. In Georgia, which the report said may be the best-managed human-resources operation in the country, agencies’ personnel plans are included with their strategic and budget plans, and reported to state leaders in the budget process.

Staff retention is an issue in states where salaries are low or stagnant, and has been exacerbated by an anti-government ethos in some parts of the country that seeks to belittle the value of the work done by state employees, the report said.

Researchers found that to boost morale, it’s possible to express appreciation of employees even if there’s no money for bonuses. In Michigan, select groups of employees who deserve recognition are invited to cabinet meetings where members stand in their honor. The GPP’s assessment of infrastructure management also yielded mixed results.

Nebraska has created a six-year plan for all construction and major maintenance projects. But in New Mexico, the governor, the House and the Senate are allowed to spend their non-transportation capital budgets independently of any statewide needs. “Not surprisingly, projects are frequently under-funded and delayed,” the report said.

Overall, the biggest infrastructure challenge is under funded maintenance, the GPP found. Oklahoma budgeted no money for facilities maintenance last year while California has shifted funds from maintenance to balance its general fund for the last two years. The repeated deferral of maintenance will eventually result in higher repair bills, the report warned.

The GPP also urged states to work closely with their neighbors to coordinate infrastructure policy. The report praised the cooperation between Florida and Georgia to cope with extra highway traffic resulting from last year’s hurricanes.

On information management (IT), the states are entering a new era in which technology is playing a central role in government to gather, analyze, and disseminate information.

Michigan is in the forefront of the technological revolution and is now aligning its IT initiatives with government and business initiatives.

The GPP found states have taken “e-government” to a higher level, offering online versions of a range of services including drivers’ licenses, income tax forms, and benefits applications. More states are now gathering data to create useful performance information.

Some agencies are using web-based performance information to improve their work, the GPP found. New York’s Department of Environmental Conservation can now capture data about air quality with technology that didn’t previously exist.

To view the complete report on all 50 states and to compare one state’s performance to the other 49 states, see The February issue of Governing magazine also reports on the state grades at

The Pew Charitable Trusts ( serves the public interest by providing information, policy solutions and support for civic life. Based in Philadelphia, with an office in Washington, D.C., the Trusts make investments to provide organizations and citizens with fact-based research and practical solutions for challenging issues. With approximately $4.1 billion in dedicated assets, in 2003 the Trusts committed more than $143 million to 151 nonprofit organizations.

The Methodology

“Grading the States 2005” builds on a rich lode of information about performance. The Government Performance Project has collected thousands of pieces of data which, put together, paint a detailed portrait of state government performance.

The grading process for GPP 2005 built on the following steps:

·    Grading against criteria. The GPP graded the states against criteria, not against each other. The team’s analysts began by carefully identifying the four management areas – Information, Infrastructure, Money, and People – that are most important in achieving policy goals. In each management area, they then identified the characteristics of effectively managed governments. These criteria, defined by the best research in the field, established the grading standards.

·    Refining the criteria. The GPP’s research team then identified the components (that is, the subcriteria) that make up each criterion. For example, a state that manages its Money well would maintain structural balance by making limited use of one-time revenues; a state that manages its People well would retain a skilled workforce by maintaining productive relations with its employees. These subcriteria defined each of the criteria.

·    Collecting the most important information on the criteria and subcriteria. The GPP’s research team then collected the data that provided the best information about the criteria and subcriteria. Researchers assembled much of the data from existing sources, including information posted on state websites and published in government reports. Some of the information came from an innovative web-based survey, in which state officials completed information requested by the GPP. And some of the information came from interviews conducted by the team of reporters from Governing magazine.

·    Analyzing the information through a collaborative process. The research team of scholars and journalists then jointly analyzed and discussed the data and its implications. They combined their information and jointly assigned the grades.

·    Conducting the process in transparent fashion. From the very beginning, the GPP committed to a process of transparency. The project’s researchers and reporters consulted extensively with state officials before defining the criteria. The GPP published the criteria and subcriteria before launching data collection. Along the way, regular electronic newsletters kept state officials, as well as others interested in the project, on its progress. When the GPP published the grades in Governing, it provided extensive explanation of the grades and of the information used to produce them. In addition to the narratives published in the magazine, the GPP website contains deeper explanation. In the coming months, more and more data and analysis from the project will be made available on the website as well. The result is an unprecedented repository of information about state government management, which will be available without charge to anyone interested in reviewing it.

This is the third time that the Government Performance Project has graded the states. The grades in this version are not comparable with the grades in the previous phases of the project, for several reasons:

·    Number of management categories graded. In the past, the GPP graded five management areas. In this version, the research team redefined all of the criteria and combined some of them. As a result, the five categories graded in previous versions do not match the four in this version.

·    Emphasis on results. Previous versions of the GPP focused on the processes of state government. In this phase, the GPP focused far more on the ability of state governments to produce results. For example, in this version of the GPP, it is not enough for a state to demonstrate that it collects information about the performance of its programs. The GPP grades states on how they use that information to improve results.

Because of these two important changes, grades in this version of the GPP are not comparable with previous grades. Such comparisons should not be made; if they are made, they are certain to be misleading and inaccurate.

The grades assess the capacity of state governments, as a whole, to produce results. The grades do not represent a judgment of any individual within state government, or of any branch of state government. Many things go into the assessments, including state legal and constitutional processes, the structure of state policies and programs, the relationships among elements of the state government, and the relationship between government and its citizens.


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Sharon Gallagher
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