State government plays a critical role in the lives of people across Massachusetts. From turning around low-performing schools to making the health care system more cost-effective, from developing new approaches to reducing youth violence to supporting job creation and economic development—state government is making a difference on issues that matter to the people it serves. Success on these issues in recent years stems in part from the unprecedented investments the Patrick-Murray Administration has made in these areas which are prioritized in the FY14 budget. However, how much money is spent by state government is not the benchmark this Administration uses to determine whether the state’s goals have been achieved. Ultimately, it is the results of those investments that matter. Has school performance improved? Has health care cost growth been contained? Are kids safer in their neighborhoods? Are jobs being created in all parts of the Commonwealth? Those are the real tests of state government’s success.
As part of its FY14 budget, the Patrick-Murray Administration has launched the MassResults initiative, which seeks to further embed a results-oriented culture within state government.
The first phase of the Administration’s comprehensive strategic planning and performance management effort culminates with this year’s budget. In February 2012, Governor Patrick signed Executive Order 540 to embed performance management across state government. Consistent with EO 540 and legislation (Chapter 165 of the Acts of 2012) signed by the Governor in July 2012, the Patrick-Murray Administration’s FY14 budget includes:
- Publication of Strategies for the Governor’s Four Priorities – Governor Patrick began his second-term by setting clear, measurable goals in four priority areas—closing the achievement gap in schools; containing health care costs; reducing youth violence; and creating jobs. The Administration developed integrated strategies for each of these priorities and regularly tracks progress utilizing performance measures to evaluate results. High-level strategies for each of the priorities have been published with this budget;
- Publication of Two-Year Secretariat Strategic Plans – Each of the eight Secretariats has published a two-year strategic plan alongside this budget. These plans set out the strategic goals of the Patrick-Murray Administration through 2014, the key actions that will be pursued to achieve them and the outcome measures that will be utilized to evaluate results; and
- Presentation of a Program Budget – This budget is presented in a new, more accessible and easily understood program-based format. Instead of simply presenting the agency or line-item account for each area of spending, this budget shows how much is being spent on the functions of state government in totality, and goes beyond simply making recommendations for annual operating funds. State government is a $52 billion per year enterprise, only $34 billion of which is allocated via the annual operating budget. This budget presents a broader and more transparent view of how state government invests the resources it has—whether from operating, federal, capital or trust fund sources.
Articulating what success looks like and being held accountable for results is something that every resident should expect from state government. Together, the publication of strategies for the Governor’s four priorities, the Secretariat strategic plans and the new all-funds program-based budget show the public not just how much state government is spending, but what it plans to achieve with these investments.
Many state agencies have been using performance management practices to achieve better outcomes and improve service delivery. This year, the Department of Transportation (MassDOT) has conducted its first-ever public accountability meeting to share its results with interested residents. The Executive Office of Health and Human Services (EOHHS) revamped its EHS Results performance management system to measure progress across its agency clusters. The Executive Office of Housing and Economic Development (EOHED) led the development of business plans with outcome measures for all of its 18 public and quasi-public economic development agencies. And to support the spread of these practices, CPAT, in partnership with the Collins Center for Public Management at the University of Massachusetts in Boston (UMASS Boston), has trained more than 300 state managers in performance management techniques and implementation.
The Administration is committed to embedding performance management practices across state government. By setting clear goals and regularly using data and evidence to make better decisions, state agencies have achieved some notable successes. For example:
- During the last four years, the Massachusetts Children’s Trust Fund’s Healthy Families program has enhanced support for children and families by increasing the percentage of its participants receiving weekly home visits for the six months following a baby’s birth by more than 40 percent;
- During the last two years, the Massachusetts Office of Business Development, which coordinates the efforts of business development entities across state government, used clear goals for job creation to reduce the amount of government investment per private sector job created. For example, through these efforts, the Economic Development Incentive Program has reduced the average cost per new job from $13,845 in 2010 to $5,253 in 2012;
- The Department of Elementary and Secondary Education (DESE) uses regular assessments to close the achievement gap in schools. Based on analysis of Massachusetts Comprehensive Assessment System results DESE has implemented a new state school and district accountability system; developed turnaround plans for low-performing school districts; transitioned to the more-rigorous Common Core education standards; and implemented the MassGrad initiative to reduce school dropout rates and improve graduation attainment. These efforts are paying off. Since 2006, 10th grade MCAS scores in English and Math have both improved for all students and have increased at higher rates for minorities and lower-income students;
- To reduce spending levels in FY12, the Group Insurance Commission required 78,000 active state employees to re-enroll in health insurance, incentivizing employees to choose limited network plans. As a result, enrollment in such plans increased from 19 percent in 2011 to 30 percent in 2012, saving the Commonwealth approximately $20 M;
- In 2012, the Human Resources Division redesigned its workers’ compensation business process and invested in a new reporting system to expedite the processing of claims. As a result, workers’ compensation claims filed are down 11.4 percent, and total compensation and medical-paid leave has dropped by 10.2 percent since the Patrick-Murray Administration took office;
- The Massachusetts Office of Transportation launched a $3 B Accelerated Bridge Program in May 2008, reducing the number of structurally deficient bridges statewide from 543 to 437, a decline of 19.5 percent;
- The Massachusetts Department of Environmental Protection instituted a new resolution process in 2007 to speed wetland permitting decisions. As a result, 82 percent of wetland appeals are resolved within six months of the filing date, up 31 percent when compared to the previous four years; and
- In 2009, the Human Resources Division and the Massachusetts Office on Disabilities implemented a strategic plan to establish the Commonwealth as a model employer for people with disabilities. As a result, the percentage of self-identified persons with disabilities working in Executive Branch agencies increased from 1.7 percent at the start of the Patrick-Murray Administration to 2.9 percent in 2012, exceeding the Federal target.
In addition to implementing performance management, the Patrick-Murray Administration has sought to change the way state services are paid for and delivered—requiring local and private partners to measure results, using incentives to reward success and pioneering the use of innovative funding models. The Administration’s Safe and Successful Youth grants program, which is aimed at reducing youth violence, has outcomes built into its grants, and recipients are required to report regularly on progress meeting them. The state’s accountability and assistance framework for elementary and secondary schools requires that turnaround plans for low-performing schools include measurable goals on indicators such as participation rates, educational attainment, college readiness and school culture.
In January 2012, as part of this ongoing effort to improve the way government does business, the Administration was the first state in the nation to take formal steps to establish a comprehensive social innovation financing program designed to encourage innovative solutions to social problems, improve the performance of government and save taxpayer money. These ‘pay-for-success’ contracts seek to reduce juvenile recidivism in the Youth Recidivism Project, outlined in more detail in “Positive Youth Development and Violence Prevention.” Under this contract, the state will only pay when a successful intervention has been delivered by providers, using agreed upon data and performance measures to determine whether outcomes have been achieved.
The Administration will be partnering with social entrepreneurs to support youth aging out of the juvenile justice and probation systems so as to assist them in making successful transitions to adulthood. This contract will be designed with the specific goal of reducing recidivism and improving education and employment outcomes over several years for a significant segment of the more than 750 youth who exit the juvenile justice system, and the several thousand who exit the probation system annually.
The Administration is also exploring partnering with social entrepreneurs to provide stable housing for several hundred chronically homeless individuals. The goal of the initiative will be to improve the well-being of the individuals while simultaneously reducing emergency shelter and Medicaid costs.
Beyond these signature initiatives, there are examples across state government of performance-based incentives being built into funding streams, grants and contracts for the delivery of vital state services. Examples include:
- The Department of Early Education and Care has tied an increase in the infant/toddler child care rate paid to providers to those that can demonstrate they have taken steps to improve the quality of their programs;
- The Department of Housing and Community Development’s HomeBASE Motel Re-Housing initiative, which helps relocate homeless families from motels to more permanent residences, pays providers a fee for each household only after they have successfully placed them in permanent housing;
- The Division of Highways is using rewards and penalties as part of rebuilding the Longfellow Bridge between Boston and Cambridge. These incentives aim to ensure transit service is not significantly disrupted during weekdays and that service is running when commuters need it. Incentives are also being used to reduce the number of diversions and ensure the bridge can be opened to two-way traffic by certain milestones;
- MassHealth rewards acute care hospitals for improving the quality of care delivered to MassHealth members in key quality areas, such as maternity, pediatric asthma, surgical care infection prevention and the reduction of racial and ethnic health disparities. There have been notable improvements in many of these areas since the inception of MassHealth’s pay-for-performance program. MassHealth also encourages a reduction in hospital readmissions by reducing inpatient rates for hospitals whose readmission rates exceeded their expected rate. This gives providers an incentive to improve care quality and reduce readmissions;
- The Massachusetts Bay Transportation Authority (MBTA) builds incentive payment and penalties into the contracts it administers with providers of transportation services for the disabled and elderly, known as the RIDE, rewarding perfect performance and personnel levels and penalizing providers for tardiness, poor travel conditions (i.e. air conditioning/heater failure) or failure to report incidents and accidents;
- The Division of Capital Asset Management and Maintenance administers a voluntary program to provide incentives for state facilities to earn financial benefits for electricity that they displace from the utility grid during periods of high demand. The program collaborates with an outside vendor that shares in savings derived from the program; and
- EOHHS oversees a Competitive Integrated Employment Services (CIES) contract that pays vendors a uniform rate across four EOHHS agencies. The vendors submit client outcome information, which allows departments to direct clients to vendors that have had greater success than others. CIES helped the Department of Transitional Assistance (DTA) to narrow its pool of vendors and expand the purchase of service from the most successful providers. Using CIES, the Massachusetts Rehabilitation Commission has experienced significant increases in Successful Employment Outcomes (SEOs) for its clients, at a reduced cost per SEO.
The Administration has also started to apply a results-oriented philosophy to tax expenditures—the provisions in the tax code that are designed to encourage certain kinds of activities or investments. In April 2013, the Tax Expenditure Commission, which was formed to study and recommend methods for measuring and reviewing the effectiveness of tax expenditures, charged CPAT and the Department of Revenue with identifying the public purpose and desired outcomes for each expenditure and to develop metrics for assessing tax expenditures’ effectiveness at achieving these purposes and outcomes. The first part of this charge has been met, with public policy purposes and outcomes identified. These are now being vetted with stakeholders and legislators. Metrics and data are also being collected for a number of grant-like tax expenditures.
Consistent with EO 540, CPAT will lead the next phase of MassResults performance management efforts in 2013. These efforts include:
- Further Embedding Performance Management – CPAT will work with Secretariat Offices of Performance Management to ensure the regular and expanded use of data and evidence to drive better results.
- Enhancing Performance Reporting – All Secretariats are required to publish performance reports with the Governor’s FY15 budget recommendation. CPAT will work with Secretariat Offices of Performance Management to develop and publish public performance reports;
- Identifying New Opportunities to Pay-for-Success – CPAT will continue to work with Secretariats to identify new opportunities for incentives to be built into contracts, grants and other funding streams;
- Linking Performance Information to Budget Decisions – CPAT will work with Secretariat Offices of Performance Management and Finance Officers to develop and publish outcome measures for the programs set out in the Governor’s Budget Recommendation. Developing a “performance-based” program budget will help state government allocate limited financial resources more effectively. The Administration will work closely with the legislature to consider how to embed performance-based program budgeting as the way state budgeting is conducted for the future and implement the recommendations of the Zero-Based Budget Commission to that effect; and
Supporting Performance Management at the Local Level – CPAT will continue to work with the Collins Center for Public Management at UMASS Boston to support local communities to adopt and expand their performance management capabilities. During 2012 and 2013, the Commonwealth funded a municipal performance management program to help drive the use of performance management practices at the local level. Additionally, cities and towns were offered the opportunity to participate in New England StatNet, a network of municipalities using CitiStat or other data-driven performance management approaches, at no cost. More than 45 communities are currently participating in the program as a result of this investment. As mentioned previously, as part of reforming state aid to local government, another important initiative announced with this budget, the Administration is planning to provide incentives for cities and towns focused on use of strong fiscal management and performance management practices. Together, these initiatives support cities and towns in their efforts to become more effective and efficient.