Tuesday, April 21, 2009

Stopping Government Waste & Sprawl Is Easy

Although I am not a religious person I do believe that most of us are born sinners. Which is a Judea Christian way of saying that most of us need an incentive to do the right thing in most circumstances.

I sell to government agencies. I get the calls every year from most of the agencies I cover in my territory all telling me the same thing. “Hey. My year end is coming up next month and I have $200,000.00 I need to burn”. I’ve sold millions of dollars in unnecessary equipment to the government just to help the manager of a governmental department make sure they have spent their total annual budgeted amount.

In case you’re not familiar with this phenomena, here is how it works. Almost all government organizations get an annual budget that is based on an increase from last years budget (whether they need it or not). They will get this increase if, and only if, they spend ALL of the money they were given in the previous budget year. If they do not spend ALL of the money in their previous budget year they will not get an increase in their budget for the following year.

Essentially, government organizations are punished for acting responsible with taxpayer money. Because of how the system is set up they are actually given an incentive to act irresponsibly with money. Your money. With this being the case, should we be surprised that government keeps growing and wasting? No. We shouldn’t because the system that government workers use is set up for waste and failure.

The only real way to fix this problem is to incent the workers and managers in government to do the right thing. Until then it doesn’t matter who is in power, Democrat, Republican, Marxist, Libertarian. The government will continue to waste and spiral out of financial control until we change the incentives.

How can government workers be incentivized to spend money more wisely? Well, it is rather simple and it is done successfully all of the time in the private sector. Simply give the management and workers a portion of the budget money they don't spend in the form of an efficiency bonus. Then, to ensure above average service delivery, tie another bonus (using only money from saved budget funds) to some sort of survey done by an independent organization that rewards the managers on a sliding scale for services rendered.

What would be the positive results of such an incentive program?

  1. Government employees would have the opportunity to earn more money.
  2. Government employees would be more thrifty with tax payer's money knowing that their bonus compensation will be positively impacted if their department spends money wisely.
  3. Government employees will deliver services more effectively knowing that their performance and ability to deliver will be independently surveyed and that their compensation will be positively affected if service targets are met.
  4. Government would require less money to operate creating a more positive and trusting relationship with the tax payer.
  5. Government workers would take a more active role in stopping waste, fraud and abuse knowing that their compensation is positively affected by meeting spending and service targets.
  6. Contractors working with the government would need to find real, cost effective, supportable solutions that provide service while saving money.
  7. Government workers would be more creative in their work place in order to maintain service levels while remaining financially efficient.
  8. Tax payers would have a better, more responsive, more efficient government and a trust in the government they pay for.

What would be the negative results of such an incentive program?

  1. If the surveys that are created to measure service delivery results are inadequate or outdated it may create a situation where results are skewed and create a pay and delivery issue in one direction or the other.
  2. If the independent organization managing the surveys does not remain objective or does not administer the surveys properly it can lead to a system that is not trusted by the government employees which would defeat the purpose of the program.
  3. If the incentive programs are not properly formed, monitored and shifted based on conditions, the system could loose credibility with the government workers and tax payers.

The purpose of a government incentive program like this is not to pay government workers less, or to shrink the number of departments in the government, or to provide fewer services to constituents. In fact, this program is designed to pay government workers more for being frugal and intelligent about how the tax payer's money is spent while delivering high quality services. It is to ensure that the government departments that do provide services provide them using the tax payer's money as though it was their own. It is to ensure that the services that are provided by government organizations are provided at the highest service level possible. And, it is to ensure the tax payer, the people paying the tab, that the money they are paying to the government is being spent as wisely as possible.

In the end, no government can serve all of every constituent's interests. Not all tax payers will always be happy with all of the government programs their money is spent on. However, what all tax payers can agree on is that the money they forfeit to the government should be spent effectively and efficiently and that the services the tax payer pays for should be delivered in an above average way. An incentive program like this could be the foundation for helping this happen and be the olive branch the government holds out to the burdened tax payer.

It wouldn't be perfect. Especially at first. But, it would be better than what we have now. I'd be in support of finding out how well it could work.

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