Ducey spends to make state lean

$29M used to drive up gov­ern­ment ef­fi­ciency

The Arizona Republic - - Front Page - Craig Har­ris

Ari­zona Gov. Doug Ducey, a for­mer busi­ness ex­ec­u­tive, took of­fice more than three years ago promis­ing to make state gov­ern­ment leaner and more ef­fi­cient.

Of­fi­cials within his ad­min­is­tra­tion say he’s done just that through his Gov­ern­ment Trans­for­ma­tion Of­fice.

But the ef­fort hasn’t come cheap: His ad­min­is­tra­tion has hired out­side con­sul­tants and added at least 85 state jobs that cur­rently pay on av­er­age $77,647 a year, records ob­tained by

The Ari­zona Repub­lic show.

To­tal price tag for Ducey’s Lean Ini­tia­tive: nearly $29 mil­lion.

Kirk Adams, Ducey’s chief of staff, and other state ex­ec­u­tives said it has been money well spent.

The pro­gram uses “coaches” to en­cour­age state em­ploy­ees to iden­tify op­por­tu­ni­ties to be more ef­fi­cient and

save money while de­vel­op­ing so­lu­tions for prob­lems.

Agen­cies also set goals and use met­rics to de­ter­mine if they’re reached and then cel­e­brate suc­cesses.

The new state em­ploy­ees and con­sul­tants be­hind the pro­gram have cre­ated sav­ings in the mil­lions of dol­lars and helped state gov­ern­ment avoid other costs.

At the same time, they’ve made agen­cies more re­spon­sive to the pub­lic, in­clud­ing re­duc­ing wait times at Mo­tor Ve­hi­cle Divi­sion of­fices from an hour to 24 min­utes.

“This is all about chang­ing habits,” said Gil­bert David­son, Ducey’s chief op­er­at­ing of­fi­cer. “We are chang­ing how peo­ple op­er­ate, and like any­thing, you have to in­vest in that.”

Those in­vest­ments in­clude Of­fice of Con­tin­u­ous Im­prove­ment ad­min­is­tra­tors who are paid up to $140,000 a year, and se­nior “lean coaches” who can make nearly $100,000 year.

Twenty-three of those em­ploy­ees have also re­ceived $89,000 in merit bonuses and some have re­ceived dou­bledigit per­cent­age raises, records ob­tained under the state Pub­lic Records Law show. One Depart­ment of Ad­min­is­tra­tion ex­ec­u­tive re­ceived bonuses of at least $5,000 for three con­sec­u­tive years.

The spend­ing to make state gov­ern­ment leaner comes at a po­ten­tially awk­ward mo­ment for Ducey as Ari­zona teach­ers — among the worst paid in the na­tion — have called on him to in­crease their pay up to 20 per­cent, and held “walk-ins” and other demon­stra­tions to high­light their de­mands. They are also con­sid­er­ing go­ing on strike.

Me­dian pay for Ari­zona teach­ers is $46,949.

The gover­nor’s re­sponse to teach­ers un­til Thurs­day has been to note the fund­ing that has been added to teacher com­pen­sa­tion and to say he an­tic­i­pates the state bud­get will pro­vide ad­di­tional in­creases.

He sur­prised ev­ery­one on Thurs­day by an­nounc­ing he would push for a 20 per­cent pay in­crease for teach­ers by 2020.

Dawn Penich-Thacker, a spokes­woman for Save our Schools Ari­zona, a grass-roots group press­ing for more ed­u­ca­tion fund­ing, said prior to the gover­nor’s an­nounce­ment that he could have bet­ter used the nearly $29 mil­lion on pub­lic ed­u­ca­tion.

“How you spend your money speaks to your pri­or­i­ties,” Penich-Thacker said. “The gover­nor’s pri­or­i­ties seem to be in polishing his own im­age.”

Ducey and the Leg­is­la­ture last year gave 1 per­cent stipends to teach­ers, who were pro­jected to only re­ceive a 1 per­cent raise this year. Each of those in­creases cost the state about $30 mil­lion to $34 mil­lion.

Ducey now wants to give them a 9 per­cent raise this year with ad­di­tional 5 per­cent raises the next two years.

Ducey’s plan still needs to get through the Leg­is­la­ture, plus there’s no guar­an­tee that fu­ture raises will be im­ple­mented.

Julie Read, a pub­lic school ad­vo­cate from north Phoenix who has bat­tled Ducey on prison is­sues, agreed that the gover­nor al­ready should have al­lo­cated more state re­sources to schools in­stead of his ef­fi­ciency pro­gram.

“It would be cool if he could find vol­un­teers like me to fix stuff for free,” Read said.

State records show the Ducey ad­min­is­tra­tion dur­ing the past three fis­cal years spent at least $13.9 mil­lion on con­sult­ing con­tracts with Hon­sha, In­te­gris Per­for­mance Ad­vi­sors, the Murli Group and Price­wa­ter­house Coop­ers Pub­lic Sec­tor LLP.

The state cur­rently is spend­ing $6.6 mil­lion on 85 state em­ploy­ees in 13 agen­cies who act as lean coaches, sup­port staff or ad­min­is­tra­tors to im­ple­ment the re­forms within the Ari­zona Man­age­ment Sys­tem.

Since 2015, Ducey’s first year in of­fice, the state has spent at least $14.7 mil­lion on state em­ploy­ees to run the pro­gram, ac­cord­ing to pub­lic records com­piled by The Repub­lic.

State agen­cies in­volved in the pro­gram are: Ad­min­is­tra­tion, Child Safety, Eco­nomic Se­cu­rity, En­vi­ron­men­tal Qual­ity, Cor­rec­tions, Gam­ing, Health Ser­vices, Ju­ve­nile Cor­rec­tions, Med­i­caid (AHCCCS), Regis­trar of Con­trac­tors, Rev­enue, Trans­porta­tion and Wa­ter Re­sources.

Me­gan Rose, a Depart­ment of Ad­min­is­tra­tion spokes­woman, said the spend­ing on con­sul­tants and new state jobs is a frac­tion of the state’s $10 bil­lion bud­get and 33,624-em­ployee work­force.

She added that af­ter con­sult­ing with pri­vate-sec­tor or­ga­ni­za­tions that have gone through sim­i­lar “lean trans­for­ma­tions,” the cost for Ari­zona tax­pay­ers could have reached $100 mil­lion, point­ing out the state did it more eco­nom­i­cally.

“The re­turn on in­vest­ment is ev­i­dent in the suc­cess we have al­ready achieved, and the change in cul­ture that we are be­gin­ning to see,” Rose said. “Each agency has de­vel­oped a plan to phase out use of pri­vate con­sul­tants and con­trac­tors as their de­ploy­ment ma­tures, and we are no longer re­liant on ex­ter­nal re­sources.”

State records in­di­cate the pro­gram has:

Saved $3 mil­lion in “hard dol­lars” by sell­ing hun­dreds of ve­hi­cles in the state’s fleet man­age­ment sys­tem and avoided an­other $31 mil­lion in costs by cut­ting the num­ber of cars.

Re­duced over­time pay by $4 mil­lion at Child Safety.

Cut the num­ber of pri­vate-leased fa­cil­i­ties from 84 to 63, re­sult­ing in $2 mil­lion in an­nual sav­ings.

Con­sol­i­dated 27 boards and com­mis­sions into one build­ing, sav­ing $1.4 mil­lion an­nu­ally.

Cre­ated space ef­fi­cien­cies that al­lowed the state to sell $15.7 mil­lion in real-estate as­sets.

Re­duced the num­ber of chil­dren in state care by nearly 10 per­cent.

Cut the time to process ap­pli­ca­tions for res­i­den­tial/liv­ing as­sisted providers from 243 days to 91 days.

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