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Home / Washington Business - January/February 2004 / Q&A with Peter Hutchinson: POG Will Succeed if Elected Officials Have the Will to Make It Work |
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Q&A with Peter Hutchinson: POG Will Succeed if Elected Officials Have the Will to Make It Work |
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Written On: January/February 2004 |
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Peter Hutchinson is principle in The Public Strategies Group (PSG), St. Paul, MN. He is former Finance Director for the State of Minnesota. Hutchinson is also is former deputy mayor and superintendent of schools in Minneapolis.
Editor’s Note: In the summer of 2002, Peter Hutchinson was contacted by Fred Kiga, former chief of staff to Gov. Locke, to help develop a new approach to prioritizing the way our state allocates funds for programs. Realizing the state faced a $2.3 billion revenue shortfall at the time, that Washington had the nation’s highest unemployment rate, the state lost the highest percentage of manufacturing jobs and our state’s private sector employers already have a disproportionately high state and local tax load (46%), the Priorities of Government and Price of Government (POG) was hatched. The result was a prioritized 2003-2005 state operating budget with no new general taxes. Hutchinson spoke to AWB’s Board in May in Spokane and to our Governmental Affairs Council. In the future, he will be meeting with Washington lawmakers and public officials to offer his assistance with the POG.
Q: What is the POG? What makes it unique?
A: POG stands for Priorities of Government and Price of Government. In simplest terms it is an approach to budgeting that focuses on delivering the results that matter most (priorities) at the price that citizens are willing to pay.
POG is a unique approach in that it doesn’t ask governmental agencies “How much do you need?” Instead it asks, “How much can you deliver of the results we care about at the price we are willing to pay?” It then ranks the answers and ‘buys’ those that deliver the most for the money.
There are three other things that make POG unique. First, POG starts with the end in mind – both the results and the total revenue – by setting the revenue up front the issue of taxes is resolved at the outset, not at the end. Second, especially when there is a shortfall, POG focuses on what to keep (what is most valuable) not on what to cut. It builds constituencies for results instead of fighting those who oppose cuts. Finally, it makes the rationale for what to keep the results to be delivered. Those who disagree are challenged to make the case for why their program produces better results at a better price than others. If they win – so do the citizens.
Q: How is it different from “Zero Based Budgeting?”
A: Zero based budgeting, like all traditional budget approaches, uses the organizational structure as its basis and asks each agency to justify its own priorities. POG does not take anything as given except the results that are to be achieved. Organizations then are challenged to find ways to contribute to the state’s priorities – not their own organizational priorities.
Q: How did the Priorities of Govern-ment and Price of Government process start in Washington?
A: It started as a conversation between the Chief of Staff (Fred Kiga) and me. He and the Governor were looking for a “not business as usual’ approach to resolving the looming budget problem in the state. POG would not have happened with Gov. Locke’s leadership.
Q: In your mind, what impact did the POG have on the 2003 supplemental and 2003-2005 state operating budgets?
A: It appears as though it was pretty substantial. It offered a solution that made common sense to people – and they embraced it. It also changed the terms of the debate from a traditional focus on interest group and partisan politics to a focus on how to use the resources of the state as wisely as possible.
Q: What are the barriers to extending the Priorities of Government and Price of Government process to all agencies of state government?
A: None that I know of. In fact I think it would be a good idea that many, many agencies have embraced.
Q: Given your experience with superintendent of Minneapolis schools, is the POG a process which will work with local school districts? If yes, what needs to be done to insure it will be successful?
A: Yes – it most definitely will work in K-12. Use the same process – same frame of mind – same discipline. First ask – what results do we want to achieve? Sounds simple enough but I found that people do not necessarily agree on what we want to achieve in school. My two cents worth – ensure that all students learn at least a year’s worth every year!
Then ask – what price are we willing or able to pay? Finally, what activities do we want to buy and at what price that will make the most difference? This is the tough one. We do a lot of good things in our schools. If we can’t afford them all we need to be sure that we keep the ones that make the most difference – add the most to ensuring that all children learn at least a year’s worth every year. Finding the answers requires that we be disciplined – base our decisions on what works, not on what we hope will work.
Q: Given your experience as deputy mayor of Minneapolis, will the POG work at the local government level?
A: Yes – definitely with the same process – same frame of mind – and same discipline. The keys – know what results you want. Know what price you will pay. Know what works.
Q: Will the POG work at the federal level?
A: It could, and it should, but as long as the Federal Government can run deficits it is hard to imagine how it will. On the other hand, it could work very well in individual agencies.
Q: What is the future of the POG in Washington?
A: That’s up to the people of Washington. The next big tests will be the 2004 session, the 2005 – 2007 budget proposal, and the next election for Governor.
Q: What is your advice to Gov. Locke and the legislature as they come to Olympia for the 2004 legislative session? How will they deal with the “push back” from the constituents who felt their “ox was gored” because of the POG in 2003?
A: I have two pieces of advice. First, stick to the priorities! The Governor’s budget ranked every activity in terms of its contributions to the priority results. Those who feel they got the short end should be expected to make the case that their funding would contribute MORE to those results than some other funding. Keep the focus on results for the people of Washington. And hold people’s feet to the fire about demonstrating the connection between their programs, their funding and those results.
Second, move forward with POG – don’t retreat to the traditional approach to budgets. Make the 2005-2007 budget that Gov. Locke will present in late 2004 an even better version of POG. Moving forward could mean – more work on specifying the indicators for each result and for demonstrating progress, greater opportunity for public input into the priorities, encouraging agencies, local governments, schools districts, non-profits and others to develop proposals for converting the price that citizens are willing to pay into results they value most. The point, don’t rest with where we got to last time and don’t move back. POG works and could work even better.
Q: What would you tell the candidates for governor about the POG?
A: One thing Governor’s can do that no one else can do as well is manage where attention gets placed. Things that are important to the Governor become the things people pay attention to. POG is a powerful tool for managing attention – used well it can help Washington achieve its aspirations. Make defining those aspirations the core of your campaign and then translate them into your own Priorities of Government and Price of Government.
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