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Joint | May 4, 2015 | Committee Room | Legislative Program Evaluation Oversight Committee

Full MP3 Audio File

Pd oversight will come to order it is 3:06 p. M. We're late. First thing to do please, anything you've got that makes noise. Please make it not make noise. Secondly, I'm pleased to announce the sergeant of arms from the House, Marvin Lee, Reggie Seals, Terry McGraw, Terry there you are. From the senate, Terry Bernard. Larry Adcock, Marcos Kates and L. Roach. Apparently it takes more Senator sergeant of arms keep them under control [xx] Keep the house under control. Thank you very much we have no I don't believe we have pages today, too early in. I was hoping you wouldn't exactly point that out. We do have a couple of us hardy souls and half and hopefully there will be someone else walking through the door and there is. So with that we will begin with remarks from co-chair Senator Hudson[sp?], no remarks. The only one remark is just to the members of the committee is to remind I know I don't need to but I will anyway how important the work of this committee is. We're us to do, to hold people accountable, to ensure they efficient and appropriate use of state money, to be attentive and involved in what we're doing here. We're all really really busy especially this time of the year, but I know this is not an appropriations committee or a finance committee but this, what we do truly we doing a people's work here and I urge you to, I know that you do take this very seriously and I want the people of New Orleans know how seriously we take all these. With that we need the approval of the minute from April 13th, do I have a motion for approval? Senator Kirk moves approval minutes April 13th any adjustments, amendments? Saying none of those In favour say I I Those opposed no. The I's have it and we move on now to Carol Shah principle program evaluator will update us on the member survey for the PED work ahead. Good afternoon, thanks to all the members that have completed their surveys, I still have a few I need to receive. And for the members who haven't filled the data that are here today I have copy of it, and I will follow up with you at the end the meeting to I'll give you copy and either Larriette or I will come by you office to pick it up. It's really important for us to have the input from every member of the committee So, you all will feel like this workplan belongs to you and we look forward to receiving your survey. And thanks to the members that have already send in their survey I urge you to when you send in your survey if you have it. Don't just put all threes down we're all not the same. What's important to you need to be noted, and what you don't think it's quite as important needs to be noted so that we give the committee clear direction on where we're going to focus our efforts the coming year. And now it's my pleasure to introduce Joe Coletti, director of NC GEAR for a presentation on [xx] the Joint Legislative Commission on government operations that was completed on March 5th. Mr. Coletti.   Well just coming up, let me just remind you is one of Governor McCrory's initiatives, MR. Colleti has headed the state-wide efficiency project since it began. Most of you are aware of Mr. Colletti extensive background so I wound go out of my way to be too complementary, just kidding Mr. Collody[sp?] the law required our committee to receive the final report from [xx] we may consider endorsing any other further proposals for further legislative consideration. We understand that some of the gear proportions are reflected within the governor's proposed budget that's already in our hands, and Mr. Claddy may wish to explain rendering his presentation and after his representation I recognized first senator Hardso for any questions and then recognized the members of the committee to question him intently or not. Thank you very much Mr. Claddy proceed.

Thank you Mr. Chairman I appreciate the introduction, I appreciate the opportunity to be back before you all again, it was last June that we talked to you as we are in the early stages of working with Deloitte Consulting Firm, t take a look at stake government. Now we have a report that we presented in March and having incorporated a number of recommendations that we had into the governors proposed budget. We have the opportunity to speak to a number of you and appropriations committee and we appreciate that, and so for today as background to the recommendations because recommendations were part of what we took a look at, given the important work that you do taking a look at stake government and trying to understand what we do that works and why we do things and the value that we get out of the programs that we do, wanted to take a walk through with you of our report because we learned a lot during that and it is not just a recommendation that we have, but the broader picture that we were able to get of how government works that I think is important, I think that you all will find particularly useful in your work, and as you prepare the program for the coming by any of program evaluation division work and we appreciate the systems of Janta, [xx], Yates and the others in programs of evaluation, who were able to work with us, provide some of the work that they had already done and also compare notes as we were both looking at some areas that overlapped. So, and I'm going to provide some understanding of why NC gear our report and then go on to some specific recommendations, so starting with the big picture, we focused on improving efficiency, effectiveness in customer service of state government. We did not, our main focus was not on cost savings, immediate cost savings, we have some benefits cost savings, cost avoidance, additional revenue for the state and our recommendations but what we wanted to focus on was the efficiency and the effectiveness and the operations of state government for the citizens of North Carolina, that was our main focus in. When we started up we had some grand ideas,  that's why am sure some of you are not surprised but as we worked with state we realized that we had the focus on the fundamentals of the state government first and so we took a look at vehicles and this is again an area where we were able to draw from program evaluation divisions work in that area. We took a look at facilities, we took a look at facilities, we took a look at IT and we budget and those were critical things forced a government to get right. If we can't do those things right then it doesn't matter what other good ideas we have the other ways that we can accomplish things. We wanted to make sure that we focused on that and so I think it was last year that we were asked something about would this be the best thing since sliced bread, we're not sure that it's the best thing since sliced bread but we're thinking that we got figured out how to slice bread. And so we think that's accomplishment sometimes and as you know we do have a number of challenges facing state's government and these are some of them that we do we face facilities retirement is in health benefits, medic aid, health choice and our reliance on federal receipts in the growth of those federal receipts over the last few years. Because of those challenges that we face, fortunately, you all have a print-out because this is a very small type graph page, but in 2013, the General Assembly funded the governor's idea to have what turned into our group take a look at the Executive branch and work on how do we improve State government. We kind of took a look at our work in three phases First phase was just getting geared up I might use that pan a few more times the second face was our work with Detroit that ended in December of last year developing recommendation patients and valuations for some of our ideas and then the work that in the stage that we are in now which is transitioning to a continuing program in implementing the recommendations both in legislation and in areas where we can with the administration. Another way to take a look at it is we have eight steps in implementing the initiatives, and again while we are not focused entirely on cost savings we do

recognize that that's an important aspect, one important measure of how we're doing and so we are able to achieve $14 million of savings and increased revenue in the first year $57 million the second year and using discounted cash flows to put in present dollar value, we end up with $615 million, when you includes five years of benefits for all that initiatives that we've recommended, and you can see a few of them that and we are going to more details on this as we go through. The process was that we reached out as much as we could, spoke with 30 individual legislators along the way many of you in this committee, reached out to the chamber, the technology association we had the opportunity to speak with senior TOHIO legislature, talk with people through out state government n the executive side, received about 500 ideas through our ncgear. Nc. /ideas website, and had individual meeting with agencies a long way as well. The main focus of that work was we started of about $500 ideas and you trying to get that down to a manageable number we think we did. And we did that by taking a look at the value of things in terms of dollars and in terms of customer service those that had high value and those that were relatively easy to implement were our main focus and since we work with consulting companies and we had a lot of things that we were working with we had to use co loured babbles, helped us understand things and it looked really impressive. On value estimates again its $615 000 000 and present value terms we try to be as conservative as possible looking for ways to have standard cost across the items that we are taking a look  at making sure that we are taking a look at things in the public sector contexts and we had a 4% discount rate to bring those future dollars into today's dollars. So the report itself we have nine sections and recommendations themselves are one part of that, that's the 4th section so I'll talk about some of what we learned through this walkie[sp] through the rest of the report, and then come to the specific recommendations towards the end. My apologies Mr. [xx] I appreciate cellphones great innovations those things are. The first part was taking a look at some quick fixes, and by quick fixes, I don't mean these are things that are easy to do or that will be accomplished in the near term, but these are things that some agencies are already doing and that others for other agencies to adopt this, it doesn't require legislation, it doesn't require new budget authority, it's something that they can start doing right now, and that we were working with some places on, and again, there are folks who are already doing this. So mapping the process is the first item and we have a number of agencies, we have about three or four agencies that are involved in WIN and Six Sigma Initiatives and have green belts, black belts and others working for them, and that was one of the things that we found early on was that if you ask a question about how do you accomplish something in too many instances we don't know, we don't know how the process works. So that was step one is, let's take a look at what's the process, who's involved in getting things done. Creating checklists and timelines there're again some places that in our work and in asking our cross state government about how do you accomplish things, the lack of a checklist made it more difficult to be able to standardize processes and being able to train other on getting the work done and be able to start from scratch especially if you have some turnover and your personnel. Then cross training was something that some agencies are doing, if you are not doing the first two it makes it really hard to cross train, but if you can cross train and get people to know the other jobs that are there in customer service and call centers especially

that was a great opportunity for people, so making sure that people understand not just their own job and their small section of things but how that fits into the broader work. We have a number of powerful tools that have been developed by IT or that we've purchased or the individual agencies have developed on their own and whether that's using pivot tables in excel, whether that's using our Ivys[sp?] budget system, whether that's using the Bacon[sp?] personnel system the [xx] system and the decision support system within that. There are too many people within state government who don't know how those things work and those are powerful tools that we have that are there for our use but it's a question of getting trained on them to an appropriate degree and use seeing them often enough to be able to know what the capacity is for those so that we're not turning around and saying, we need this new IT program, we need to purchase this new software system when we already have something that actually accomplishes that, we just don't realize it. At the department of Environment and Natural Resource in other places, they established processes to evaluate positions when one becomes vacant so that instead of saying we have a vacant position we need to replace it exactly, take a look at the work that's being done and say we can take these money and redistribute it among the people who are still there potentially give new potentially give raises to some people, return some of it to the state or to the agency and be able to accomplish more with fewer people. And in simply asking questions the number of times that becomes an important thing especially the question why, why do we do this? What do we get out of it very important questions as you all know on this committee. Then taking a look at our current operating model and I'll go through a couple of the specific items that we learn in this area but how do we function was an important part, and taking a look at the infrastructure that we have, the physical infrastructure we have and in some of our older buildings we have H-back[sp?] systems that you saw it, and you can visibly see that. We have, what are call tombstone, I'm not sure if that's because they can kill you or if that's just because of the shape. But tombstone outlets in the floor that make it very difficult to work, and that then lead to potential fire hazards with lots of plugs being put with lots of cords and plugs being put into things, but that's okay because we do not have sprinklers in some of our buildings and so if there is a fire, there is no water to put it out. But this is probably one of the most stunning things that we saw this lights switch, not the fact that there is no plate over the switch itself but the instructions that go with it, it says do not turn off this light those two rooms, and two lights in another room, it controls light in two other rooms in addition to that, and I assume and in those two rooms, but it doesn't quite say, one light in a fouth room and several lights in this room, but apparently in that room it doesn't control all the lights either, so why we have a switch I'm not sure, how the wiring happened I'm not sure, but that's just an indicative and this criticism of our facilities folks or property folks, it's just that as you work with the structure that you have and try to accomplish something, that what you end up doing you put walls in where there were not walls five years before and then you end up with that type of thing. Our budget where we get money from has changed over time, 30 years ago we're 57% of our spending with general funds. In the most recent an year that we took a look at 2013/14 only a general fund. Over that time we went from about a quarter of our spending being general fund adds to being over a third of our spending being federal funds, while other funds meaning in this case, rotary and unemployment insurance adding about 10% of the funds that we spend, and you can see part of that in where the money goes, that education is taking a smaller portion of our budget, human services largely Medicaid taking larger portion of that budget taking a look at another measure of size of state government and this is states and local government so that we can have an accurate comparison across between North Carolina and other places because state fund think differently, but as you can see North Carolina, between State and Local government, the number in the Bar is the number of State and Local employees per 10, 000 residents. We've been largely consistent since 1997, or at least we end the period about the same size.

With about half of those people in government employee being Education. Three States have increased the number of per 10, 000 people will increase the size of the government. Most of the states that are surrounding us have smaller governments, and either they started out smaller, and we remained stronger, and shrunk along the way, or they were larger than us and they have shrunk since then and the other states that you see below North Carolina there, Louisiana, Iowa, Oklahoma, Texas and Idaho. They all had twenty years ago, more state employees and more state and local employees than North Carolina does and now they have fewer state and local employees. And putting the perspective on the difficulties of funding things, this is taking a look at our pension liability and our health care liability for retirees. Pension is the green bar that has a small amount of red meaning that we are slightly underfunded. The red bar is mainly healthcare for retirees that is almost entirely under funded that we have a $25.5 billion, present value short fall there. Those are some of the things that we learned about how we are organised in the state as state government and the challenges that we face. Then we worked with state agencies and some things that we call the IDEA[sp?] sessions, you can tell that we worked with a consulting firm, right? So, but had a number of those that we put together, we have one that we're still working to bring some people together, in our highlight there was part where you can see the variety of topics that we covered in those. Starting with budget and finance though, as one that we did take a look at and want to share with you that right now because of the way that we budget and that it's very line items specific and what we are to budget off is operate and what we present to the General Assembly between the Chief Financial Officers of State Agencies and the budget office, we see that we're spending about 85% of our time just on day to day operations, individual transactions, making adjustments to the budget along the way, 85% of our time, only 15% of our time is then able to be spent on strategically taking a look at where we should go and asking the CFO's and the budget office staff and the state controller's office and treasure. Where should we be, and their thought was that we should be about half and half, and I'm sure you all would agree, that if we are spending half our time making sure that we are accounting for things and everything adds up, and spending half of our time making sure that we are addressing those long term issues and trying to answer questions about how do we do this, and budget strategically so that we can provide you answers, you would think that I think you would agree with us that that's a better use of state budget and financial officer time. We take a look at an opportunity that other states have explored and some states have already gone down this road called social impact [xx] on paid for success and the traditional answer to that is, if this is a new contract and you paying for success and there is something different for in the past. We would answer that. But this takes a look at is, an opportunity to have an existing program or new program have some private investors fund that, and we pay only if it's successful. And set aside some money to be able do that in a couple of years after we got some evaluations of how that accomplished its goals. We also are taking a look at economic dynamism, which is that the value and the growth of the economy employment comes from new companies and growing companies but a lot of research has been done that we have fewer new companies forming, we have fewer companies that are leaving, that leaves more middle aged companies and speaking as somebody who's in that category in life, we take fewer risks companies are the same way, they take fewer risks and that leads to a more fragile economy. So taking a look at what we'll be bringing together Counties, Municipalities and others from the community to say what does it take to start a job? What does it take to start a business? How difficult do we make that? And how long does it take to start a business? If we can address those things, then we can help improve the flow of the economy and help improve job creation. And them some of the lessons that we learn from others or on our own during the process, we learn from the people who were involved in

the G-pact and the G-pact two 20 years ago, and 10 years ago, that communication is important. We din't always accomplish that but, we did our best to make sure we were communicating with as many people in as many opportunities as possible give the legislature on board we'd love to be back with that. Focus on implementation, that's where a lot of our attention has been placed especially since January but that part of the reason why recommendations we put them in one pages so that we can focus on working with the agencies and actually getting this done and how do we accomplish the goals that we've set out in the recommendations. In terms of organization and timing we wanted to make sure the governor is involved. We wanted to make sure we that when somebody's doing this next time, we learn that you need to start early, and you should not compete for legislative session. Nobody appreciates that. A lot of time that's cannot making sure that things happen. When working with others, we need to make sure that we have a map but it ends up being a difficult thing because innovation happen in places that aren't already mapped. I'm a baseball fan, I think about Tommy John surgery. Tommy John surgery was innovated in the 1970s, it's called Tommy John surgery because before the picture of Tommy John, who at the time was pitching for the Dodgers before he underwent that type of surgery, nobody had done that and returned to baseball and had a successful career after that. It's called Tommy John surgery because it was the first in its kind. When we're looking for data an evidence for social impact bonds, or for where do we go, and trying to pull the best practices from other states, if we're looking for what really works, it's not always going to be an easy thing to see because, it's going to be something new in many cases that hasn't been tried or hasn't been tried broadly, hasn't been tried at a state level, hasn't even been tried in a state like ours. We're going to have to recognize that those are things that we haven't taken a look at but sometimes, as much as innovation is useful, sometimes the best approach is to just not do anything, to stop doing things, sometimes we've created our own unintended consequences and so rather than taking a look at how do we fix that, by adding a new program, we should take a look at why we do that in the first place and can we stop and that's one of the questions that we couldn't answer nearly an up again because going back to the question of that's available the data that's available within the state and how our processes work, we couldn't always answer those questions. So that's why we focussed on blocking tackling, making sure that we've got the base is covered and the federal money that's coming into this stage is structural questions. So now we're to the specific recommendation that we took a look at them we have about 22 of them, combining the report. The ones that have asterisks after them, managing attractions, elevating military invention programs, motor pool or motor fleet and occupational licensing, those are one, and also the child support payments, those are ones that we drew average from Program Evaluation Division, and we're able to benefit from the work that they've done and others, the rest of these are ones that we can discuss probably when questions but I'll walk you through a couple of the specifics and look forward to your questions on these, or any others. State attractions is one thing that we've received a number of questions about, what we're talking a look at here was taking the parks, the zoo, the aquariums, and the Science Museum from the Department of Environmental Natural Resources combining it with the existing cultural resources that we have in that department, and making sure that they're able to manage and work with private sector donors, and achieving the visitor expectations that we have, and opportunities for bunger[sp?] pricing, opportunities to raise revenue through more leveraging of the our nonprofit groups that we partner with, and opportunities for individuals to donate additional money as well so that we took a look at that and saw that we could have $3.3 million in the first year, $7 million the second year. State facilities these we take a look at as where do we have state facilities and where can they be consolidated? How do we make desicions about those things and Jackson there we saw taking a look at the map, we have a vocational rehabilitation facility two and half miles away from an employment security office. many of those people are using the same services actually could they be consolidate?

Charging agency these runs on utilities, other states do that when an agency has its money, they approach things celphony. That's something that it would rethink benefit, be a department of the administration, and apart of the and [xx] through our agencies as well, and then taking a look at the efficiency of the facilities, and how we manage those working with human resources on a number of things in his first tour legislative request with, take a look at term solutions, and customer service provided there are, workers compensation, how to re-reduce those cost, the service delivery model within their, and benefit committees. Enterprise resource planning this was one of the things that will help us be able to answer some of those questions. Budget director Lee Roberts has referred to it as fixing the roof. You know that you're going to need to fix the roof on your house, it's hard to say how much money that actually saves you, but it is important thing to do. Working with the law they anticipated about $300 million worth of costs on this over 7 years, two thirds of that being on business improvement making sure that we can accomplish in working on the processes, only one third of that being on the technology itself, and an RFI was issued on April 17th to help with the direction on that and validate the response and validate that approach. IT restructuring, something that was also taken work out with Lloyd and with the states CIO[sp?] office about how do we work together across the government especially across the cabinet where everybody does report one boss to make sure that we're accomplishing the right goals, and being most efficient with how we purchase, and motor pool, motor fee] what we took a look at, and what we've recommended and lessened the budget is to move to short term vehicles, to a private vendor. We're down to one vendor right now, this is an appropriate time to take a look at that, and there are opportunities and numerous other ways of attaining the vehicles on a short term in the market place so definitely an opportunity to take a look at, and if we can do that then that would help us with our vehicle long time vehicle assignments as well. Then looking at the long term where we go from here, we think that this is a need as the red queen told Alice, you have to do all the running you can just to keep in place, if you want to get somewhere you have to run twice as fast, and that's what we see through these work that it's been a number of years since this is kind of approach has been taken and on the executive side it should not be that long before we do take a look at this again and so we think that having an established organ within the office of the state budge would be an appropriate thing so we can keep a constant evaluation and monitoring being able to access the information, being able to implement the ideas through the budget been working with agencies we think this is an appropriate next step so those are the slides that I have for you and look forward to your questions. Thank you Mr. Chairman couple of questions I want to get to. I guess kind of the first one is probably good recommendation here, but kind what's not here, the legislation does proposal in the past year to look at all executive branch agency that was coming in yet there are no proposal related specifically to DHHS or Medicaid which is probably our largest budget issue in the state, I think the same could be said on Department of Public Safety and others. What kind of prioritize those out of your recommendations? We did take a look at those agencies Medicaid given the questions that are still surrounding which direction it goes, we figured it would be a better thing to redirect our resources outside of that. We did develop two recommendations with DHHS, one is taking a look at the Electronic Death Registry System and one is based in part on program evaluation division work, the taking a look at child support incentives how do we make sure that we're providing the best response to the people who need he child support.

We also worked with DPS on taking a look at their questions on that one, part of what we're taking a look at, was some of what they're already taking a look at. How do we deal with inmate health, how do we deal with job training and reduce recidivism, we're still working with him on those things and trying to find the best responses to those. But we did take a look at broadly across state government, but again it did come down to, in the recommendation, what are those fundamental building blocks that we need to have in place before we can start taking a look at some of the other things. Follow up. As also as I go through the report, when we're looking at and we're looking for changes, I guess the things that stick out to me the most are recommendations that have a negative present value beside them that was with coming in and I guess the one that sticks out the most to me and I think you'll find that I'm a large supporter of the of the policy that was in but the recommendation for efficiency is to spend to lose 1.4 million [xx] by you on the enforcement of standards for and as we were coming in and adding new positions to OSBM that has a negative net present value. If we thought we were getting more efficiency out of them and those type of things then that would be a positive value, so how that get brought up into the priorities that we should lose internet present values. Well there are some things that to use the OSBM example in particular, was some thing that we're focused only on the office and the people involved there so the work that they do as the recommendations that we have, ended up with a positive present value of $600 million. We wanted to make sure that those were attributed to the specific projects instead of to the effort itself, so we wanted to recognize that the outcomes of the continuing group within OSBM which would be the work that we've been doing and making out of continuing and permanent effort, that was something that we think is important, is like fixing a roof and the value and the value of that would be in its recommendations and the implementation that come from the work lather that from the people themselves. We think that can take a look at that as an investment and do the fruits of it marry the return on that that investment of about a million and a half dollars over the course of five years. Could you make the same reinforcing the standards on pet breeders?   I believe that the governor, and the commissioner and the legislator are working on ways to accommodate that one, and solve the process that's in place on that one center Sir [xx] Thank you Mr. Chair for being here. Can you give a take of a second and walk us through what the criteria you all applied to establish the prioritizations? commission chairman I apologize this an awkward setting so I forget to turn around. No not all I don't stand on much [xx] Appreciate it. How much for me So, the methodology that we used was we did come up with rough pricing values for things before we went into specific detailed pricing value for items. We also then took a look at the customer service impact of the items that we're taking a look at. And this is the bubble chart that I had up earlier and I know there's the easier way to get there but. And so with this we're taking a look at the dollars that are involved. What is it's dues to improve the process within state government and what kind of customers the service impact is involved, that's the value axis, the vertical axis on this, and the implementation axis this was, how many agencies were involved? Were they cabinet or concil of state? Is there legislation that's neeeded? How long does it take to actually accomplish something? And so that we weighted up both of those and tried to go with those that ended up in the top right quadrant with the things that were relatively high value, relatively easy dimflument[sp?] and then we drew a diagonal in the

bottom right quadrant and the upper left quadrant to further make sure that we were only focusing on the high value things and the lower rate was things that may not have a lot of value, but we expected to be relatively easy to do, of course that clarification always get shattered and the upper left was something that was extremely high value, but kind of complicated though it takes a long time to do, and so that was the criteria that we were using. Follow up? Domain? Follow up. Joe can you define kind of when you say value, because if I was doing kind of, using the gardener of magic water or for all, familiar with, a lot of us who do consulting easy is a good thing, I think of the quota being two axis and I don't know if there's a way to translate it, and not today, but to take all the projects unless where it's just implementation that ease or difficulty obviously is the one what you're kind of getting at, but you added some other factors keeping it that simple, but the other piece-on-value is just as a flat arrow I looking at tangible costs to implement versus this differential of what the gain would be in terms of whether we want to account intrinsic values than values but to say this gives us the biggest paying for the bulk, where we get the biggest savings, and this is going to be the most difficult to achieve because I'm not quite sure that you NPV and all the other things what gets us dollars today. So what we were taking a look at was the long term value to the state and so it's essentially the same thing that how much the bank for the buck how much is the juice worth the squeeze all those questions that's what we try to use as this and be happy to go through some more of the details of the questions that we had that went into that and the calculations that we worked on with the [xx] on those. One last follow up from me. Go ahead. Can you provide a list of every single project where it falls relative to this quadrant? Is that possible? We can provide something that will help you out in that. Senator Clark. Thank you Mr. Chairman, Mr. Cletty[sp?] could we turn to slide 11 please? Thank you we're just there. OK, on that slide you indicate there was 73 opportunities and 53 fell above the diagonal I'm not familiar with this type chart, where is the diagonal? What are we talking about here? We did not include the diagonal in this picture but it's the 45 degree line that you can kind of see as you take a look at the bottom bubbles there. So the bottom line. Excuse me Mr. Chairman Follow up. Please. So the bottom line I guess is you figure that there were 53 projects that should be continued or persued, could you explain how that relates to page 26 where we have recommendations versus what I would expect to be 53 recommendations, and also relate that to page 35 which we have financial projections but I don't seem to be able to much up all those financial projections here with what's on page 26r what's on page 11 here? It's the true benefit of trying to incorporate things into the budget along the way that it makes things as complicated as possible for everybody to be able to follow. So the ideas that we are taking a look at that are represented in this [xx] circles, we started out with 53, some of them as we looked further into them began fall out because the value as we were taking a close look at that, this was an approximation, and we got through, that actually is harder than it looks or there's already something happening in that area, so we'll set that at sometime. And some of them did end up in the 22, sometimes they were combined so that when taking a look at human resources for example we took a look at workers compensation, the benefit committees and, the the operating model, for human resources. But when we came to putting the recommendation into our report. We combine them into one page so that, we can talk about it in the simpler version, and then once we incorporate the ideas that we have, among those 22 in the pages that we have in the report, into the budget, we ended up having to use some different language in places and some of the things ended up being broken up into a couple of pieces because in order to make sure that the budget worked,

in terms of helping people be able to understand where the money was coming from and going to, so the cultural resources line we broke up and shows as two lines instead of as one item in there. So it's again not the most straight forward mapping of page to page to page but that's the nature of the three different types of work that we're going on here. Follow up Mr. Chairman. Please. What I would like to see possible whether you call it an idea, a recommendation, opportunity some sort of execution matrix that shows every idea that was recommended by [xx] whether or not it was implemented, or the status of it in terms of implementing it, what sort of benefits the state would receive by implementing? And some straight forward easy to re group that I can understand. We can definitely do that with the 20 or so that we have there, we were able to put values, with [xx] roundabout that many, we weren't able to get detailed cost estimates and benefit estimates on some of them and so that's why they fell out but, be happy to provide whatever detail we can on those. And like said in the status if it's not yet completed. Representative[sp?]. Thank you Mr. Chair, I'd had to hear that today on page 27 of course I live in Randolph County where the zoo is, and I just want to know that Aquarius are done by receipt that the zoo has to beg for everything, but with this change would that mean that it will be fair as far appropriations? In our recommendations we didn't go into how appropriations should we handled, we were taking a look at the management of the aquarium the zoo and the other attractions within dinner and as they move to cultural resources. So how money gets appropriated to them is something I'd still be at a discretion of legislature. Senator [xx] didn't mean to call you. Thank you Mr chair. I'm looking at the report and on page 43 we talk about the child support [xx] and how this recommendation or this mirror  something that came from the PED, and when we adopted our final report from PED are the final recommendations and the final legislation. We did not do a 75-15 time split we are elected not to do the [xx] stand a bonus payment yet that seems to be incorporated into the report, and the thinking was that if we allow the department to hold back 15% they could update their R2 software to where the counties can do a better job collecting child support, and if so, that would draw down more federal incentive money that would go back to the counties to where the counties could have the resources to do a better job collecting the child support. So the recommendation that's in the report it really isn't the recommendation that came from this committee, so can you talk about that? Well, we were taking a look at the initial report, and so we may have as we've again trying to focus on, trying to do implementation at the same time I was writing our report and trying to measure it up with the budget. We may have missed some things along the way, but that's something to, it's for consideration that these are what we put together and look forward to the further input from the legislature as they move forward. Follow up?  Yes madam, please. I would really appreciate the opportunity to work with you on that. I appreciate that. Thank you. Seeing no more committee hands like Senator Hartsell. Thank you Mr. Chairman. Mr. Brody I have the fortune or misfortune of having me the only one around, and they did G-Pack[sp?] one and G-Pack[sp?] two, and was here so of course we had the preliminary meeting last June I have some real concerns some

of which I may want to talk with you about offline, but just a couple of tactical questions and I want to go back to the minutes of our meeting last June. It is there a companion technical report describing the methodology and the statistical and cost detail. In the same way or the summary as it relates to your recommendations. Senator Hartsell we have the slides that I have here were taken from some of the technical work that was done with methodology, we did not include that in the report, but it is available. Could we get that released to us and I think that relates in part to what Sandra Clark was asking but it's not entirely the same thing. OK. We hear last June, you indicated they would be implementing legislation that would be a part of the report. Well, there is no implementing legislation that I saw as part of this report crossover was last week. How do we propose to implement even the recommendations that were made? Senator, the provisions that would implement items that are in the NC year report were incorporated into the special provisions for the budget. All the how are the recommendations? The recommendations require that from the executive branches understanding would require provisional language and implementation statute and legislation are included in the statute revision sir. Okay. We're going to go back to the top. The power point that we have, basically discusses how you develop the proposals, not necessarily the specifics of what you proposed. Now why did you in this requel[sp?] end otherwise even in the report not spend a little more time at least discussing the top four big ticket items, for instance, the school district purchasing, we din't even have a discussion about that today. Human resources manager, I differ a little about that, unemployment insurance budgeting, I mean, why don't we have a little more depth as to what was proposed? Senator we were, again what sets Ensiger[sp?] apart and makes it a different approach than it has been taken in the past is, we took to heart the idea that we should focus on implementation, that we heard from numerous members of the Legislature, former members of the Legislature who are now in the cabinet or in the council of State, people who are involved in a number of these things and we've heard from people across other states as we were taking look the as we are staring our work on this, that the implementation is the most important part that you can, nobody wanted a think book or a thick set of books that would serve as a door stop or they would gather dust on bookshelves, so rather than worry about describing things in detail in our report when it came to the recommendations, we wanted to make sure that we are working with the agencies and working within the executive branch and getting into legislation and into the budget bill and into the budget document itself, what's involved in accomplishing this. So we were focussed on the implementation more than the description on making a report that many people might read, but might not read too much action. Okay, I'm going back to the minutes of our meeting last June and one of the things somebody said, I'm not sure may have been sent to [xx] or whomever comment and we thought we were going to receive something that frankly the report may well be a waste of money unless to proposes bold and innovative ideas. I don't see anything that's was any particular department.

I don't see anything that addresses funding formulas in any way and any particular area. We were told that we might get something along those lines, I don't see anything there, can you? we can go into some more detail or some other point, but how do we address that? Can you respond to that? I'm showing my frustration a little bit here too. If you like. Senator, I want to go back to one of the comments that I made early in the presentation is that for as much as we had grand ambitions to be able to accomplish things that were, that had not been tried. When we took a look at the State of State government, and the more that we took a look at it in June we were about two months into our work. After continuing that work and seeing what the state of our information is the ability to answer questions that we have within state government. The way that we we are able to, the way that we are not able to manage IT projects, the way that we are not able to manage HR, those things led us to work with those agencies and to end up with recommendations that focus on the fundamental pieces of state government. This is the result is again perhaps not the greatest thing this flight spread but if we can slice bread sir, we think that is a major accomplishment because, yes a number, some of these of these ideas have been recommended multiple times before but they have not been implemented which is one of the reasons why we're still able to recommend them and why we think they're still worthwhile. So that was where we ended up with our focus, we think that there is still plenty of opportunity to improve state government. We did take a look at the opportunity to move some things around, improving the state attractions. We think that being able to accomplish that sir, would be a major accomplishment and this is something that this committee and the program evaluation division had taken a look at before, had they reached different conclusions but we think that we can accomplish that and it would be a net benefit to the state itself and to our citizens There's more [xx] Sarah[sp?] Thank you, this will go along with what senator Hatch[sp?] was saying on discussions with more than 30 legislators, so, and then you talk about the recommendations that I would imagine are in the provisions in the house budget. Is that correct? Yes, madam. So I would imagine that most of your discussions were with House members We tried to reach out to both sides as much as we could then, so Okay Thank you Mr. Chair Senator Hays Just one area if it's not in the governors budget we have their proposals. If there is not a specific proposal dealing with one of these items listed in that budget. Is it safe for us to assume that the position is that the executive branch has the authority to do that and has already began the implementation of that because they don't need the legislature so all these items that don't require any budget, approval or the provision doesn't exist, they are already being implemented They are, we're working on the implementation of those items, yes sir and that would be whether being the attention focused on, inplementation. We are working to accomplish the implementation seeing how far we can get with that because in some cases, just as items were falling out along the way, some of them may still have to fall out because the because of timing or other difficulties there were unforeseen at that time. Senator [xx] Thank you Mr Chairman. On page four of your report, it talks about you missing

the results and you indicate that net benefits in the first year of 14 million and then over a 10-year period, 615 million, could we get some idea of who are these numbers and what you're expecting these to come from? Would that be a possibility, I'm curious, I'm excited in reading this, but I would like to see it if that would be possible Mr. Chairman, may I ask for a follow-up. You may, do you want to respond for his request? We can provide something [xx] OK go ahead. And then on the, because I've been interested in this a long time and this could be privatization or a [xx] etc. And I know that was mentioned but I didn't quite understand the savings etc. and I guess the last thing would be Go ahead. We always hear, and I think senior houses mentioned this it seems that the biggest problem we have in the state government is this Medicaid issue, and I don't know if you had some suggestions or ideas relative to this because it seems like everything we do is required as far as cults and other things, sort of eat everybody's lunch and what we do and don't do was curious as Senior House Commission that being one of the largest issues the most prominent and complex, if you had any ideas and I know you did mention a couple of things, but I didn't know if you did anything beyond the two things that you've mentioned. Right I'll start with the vehicle privatization because that's actually much easier, obviously to address. So with vehicle privatization we're taking a look at the difficulties that are involved with trying to get a vehicle between going out to Blue Rage for a state employee. Some of the rules that we have internally on when you can use your own vehicle, and how you can get reimbursed for that, so we do have some more specific dollar information that we can provide to you, but what we are taking a look at was that was one that was truly a government effectiveness and customer service aspect, as anything else. What we're seeing is that and the vehicles and the motor pool has been doing a good job of consolidating and working on the size of the motor pool, the number of vehicles that they have and making sure that they are being used to the fullest extent, but taking a look at where we have people across the state and the opportunities that exist for them to be able to get vehicles if they don't have to get to [xx] how do we make that process easier? That was what we ended up with on that side and then the fall line impact from that and the larger motor field and the permanently assigned vehicles if we can make it easy for people to be able to get access short term to a vehicle, it may reduce their need to have long term access to a vehicle permanently on their own. We think that the combination of those two things is something that adds value dollar-wise and for the individual. Do we still have, how much time do we have on insurance? Only a few minutes. Okay, then if I sing and dance a little bit do I actually have to answer the Medicaid question? Not necessarily, we all know that. So it's a challenge and and I would not seek to speak about Medicaid given the expertise that exists elsewhere. Any other questions from the committee? Seeing none, wait a minute, I do have Senator Hudstle. He made recommendations relating to the human resources in this modifications, will that require a major overhaul of the current Beacon System, and if so do you have any expectation what that would cost or how you would address that? Alright, Senator Hudstle we, the recommendations that we have related to human resources are not specifically related to Beacon, and so we did not expect that there will be an impact on the operation of Beacon or require an immediate change to Beacon

to be able to accomplish them to the extent that with the Enterprise Resource Planning, Human Resources, software, is part of that consideration, but that's separate from and not entirely, it's a separate recommendation and not entirely related to the operation where people are and dealing with workers' compensation. Did you engage in any review of basic funding formulas? Finding formulas for instance in the public schools, finding formulas with regard to university, HR any of these major departmental allegations, and if so, what did you find, if not Go ahead. So we did take a look at a number of areas when it comes to how do we pay for things when it come, but when it, taking a look at how to, coming up with recommendations and those areas as you know is a challenge and not just, to use schools as an example, not just because of the traditional way that we think and then look at it is combining cities with counties but that if you were to take a look at other ways to accomplish things with funding, that's to the point that I was making earlier that innovative things are not something that has, that have been tested and implemented in a number of states. So while there're some ideas out there in cities to be able to say that we are taking a data look at things, made it more comp, made it, left us with, being unable to able to say specifically, this is where we should go because there wasn't anything that was solid enough to be able to build on. So we took a look at it, but we couldn't come to any follow up. Senator Hartsell Not even any recommendations as to [xx] to do that? Senator it's, probably something that could be taken a look at it, in the future, there was not something that we wanted to take a look at this time, but again we were trying to focus on the things that had large value short term. A pilot is a small idea, a pilot for example, the evaluation that would be involved in that, we think that there's plenty of opportunity for random control, randomize control trials of different policies. We think that the social impact bonds may be an opportunity to take a look at different ways to accomplish things that other pilots are definately worthwhile but rather than provide some examples or recommend specific experiments are pilots we wanted to focus on what other things that we can do across state government that nobody would be able to do outside of a program like this, or like program evaluation. We anticipate that agencies will be able to come up with a number of pilots legislatures, you all can come up with a number of things that would work as well, we'd be happy to work with you on those but for our report this time we want wanted on the focus on cross agency things that would be otherwise extremely difficult to get through. Seeing no more comments I have a couple. With all due respect, frankly I think we all expected a bigger deal. We all expected some major recommendation, something we could get our teeth into. Thats, I appreciate what you've done and the hard work and look behind the curtain and under the bed and all of that but what it seems to me, you've given us to a great extent a management, analysis, we could better manage that really don't come as any big surprise we can better manage, this's a big operation, a multibillion dollar operation we can better manage everything. We know that coming up solutions is a challenge and that's part of the reason that we look to you to say, to some extent out with the old, in with the new here's like bold idea that's going to significantly enhance how we efficiently and how we officially deliver services and offer value to our taxpayers. We hoped you, frankly we, I think we all hoped for more boldness, but we understand, and it

also seems to us that to a great extent all those [xx] because it's, as you said, it's in the governors budget, we don't have anything really for to do, it's put your [xx] on the budget, so I challenge you in that area on behalf of what I heard from the committee and what I've read of the report, I really expected a bigger deal, many, much of in fact in my cursory reading, almost all of the recommendations have been covered in PED activity or are currently being covered in PED activity, we need you to kick it up, so I am trying to be respectful but we need more, we know how tough this is, that's what we do here, is deal with issues that have no clear the easy low hanging pru-dancers, we need the stretch, so it's a big concern, now far as the committee is concerned, at this meeting there's no action to be taken, but I am, you've asked a number of questions Mr. Colete is going to get back to those, to all of us with answers to the question. We need to re-read this thing, we need to understand what are what are we going to endorse and so one of our members in the house said it's never over around this place, there's always, everything is still alive somewhere in Cabringe, so there's things we can do and if nothing else we can ensure that this effort continues or changes or doesn't continue. We've got a responsibility here, so I'm asking you to stay engaged with this process and ensure you understand, and question hardly, the conclusions that have been drawn in recommendations have been put forward. With that I want to ask Mr. Tucker to explain why spreadsheet that's involved. Members if you have in handout this yellow ten page spreadsheet, it's divided it into two parts. The first part takes all of the insigia proposals in the order of their listed in the larger report that Mr. Clady talked about, and as a reference there to a page number, if you move across it shows you if any new employees are required, the net present value numbers that came from the insigia report, and then whether or not money is required to be spent, or receipts, or accomplished for each of these individual measures. Now, the 2nd half is a sort where we took the net present value of the recommendations, and sorted them in descending order. It starts with N/AE because those didn't sort, but then you can see the relative size of the net present value recommendations from the report in this, and also you can trace back to specifics on, in this report. Mr. Andre[sp?] With that, Mr. Willy you very much, I know it was a lot of work and time consuming, a member shows up and you just have a few pieces of paper and we ask you a few questions how, how much work these kinds of things are, which, all of us know, that like a duck it might be common service, but there's lots of piling going on underneath, and lots of challenges that come up somewhat unexpectedly, and from some of the strangest places, putting it mildly. But I, we greatly appreciate you coming, and we appreciate your work. We have, before I tell you when the next meeting is, Senator Hudson. I have one question. Sort of supplemental to this. In reviewing this as relates to the university system, I saw some folks of yours, did you or did you see gear look at the strategic plan developed by the university, these are the recommendations, modifications, or was there any review done in conjunction with that strategic plan of the university, developed and adopted I think about a year and a half ago. Senator, we did not review the strategic plan to say to say whether it was a worthwhile plan or not. We worked with the university and said how do we help you accomplish this and how do we go forward. With that our next meeting

of the Joint Committee on PED oversight or Joint Oversight Committee for PED or but I will recall, I'm here to write one on these days. [xx] program [xx] oversight committee. What he said we'll meet on Monday May 18th at three P. M. And one last thing remember our PED list of projects, please, please get those in and we will discuss and approve the 2015-17 PED work plan at the next meeting. This meeting is adjourned.