Terri Bonoff

THE COMMISSION ON SERVICE INNOVATION:
STRATEGIC PLAN & REPORT TO THE LEGISLATURE

12/15/2010

With the state facing multi-billion dollar budget deficits biennium after biennium and growing frustration among the public and lawmakers with the limited innovation in government, the 2010 Legislature created the Commission on Service Innovation.

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Terri Bonoff

The legislation charged the new Commission with developing a ―a strategic plan to reengineer the delivery of state and local government services, including the realignment of service delivery by region and proximity, the use of new technologies, shared facilities, centralized information technologies, and other means of improving efficiency.

The Commission on Service Innovation has made findings and recommendations with this strategic plan and report. The recommendations were often developed with the philosophy of retaining the core purpose of the current institutions and programs but with the aim of removing barriers to innovation and creating incentives. Together, these recommendations will transform government and restructure its operations, especially in the ―back offices of government. Even if all these recommendations were collectively able to achieve a mere 1% reduction in the cost of government, this would generate at least $250 million in annual savings.

The Commission gathered and reviewed existing data related to demographic, fiscal and budget trends. The findings reveal that even after the recession ends, the state will still face daunting challenges that arise from changing demographic and economic realities, which include an aging and changing population increasingly reliant on public services such as health care and education and diminished prospects for economic and state revenue growth. Shifts in Minnesota's population, coupled with slower state revenue growth, increased health care costs and continued prioritization of K-12 spending all add up to create major budget challenges in the future.

Assuming revenue grows 3.9% per year, health care continues to grow at 8.5% and spending on K-12 education grows by 2% per year (CPI inflation) for the next 25 years, all other segments of the budget beyond health care and K-12 will have to be reduced by 3.9% each year to avoid budget deficits. This would nearly eliminate all other areas of spending by 2035.

The state is currently on an unsustainable track. The challenge we face is not just to balance the budget, especially the current one, but to find sustainable, long-term solutions to delivering public services that meet our citizens' expectations for price (cost) and quality. Transformative governing, innovative delivery of services and increased efficiency are necessary in order to not only extricate our state from its current fiscal trend but also to create lasting, meaningful change.

Commission recommendations to be considered by the legislature, executive branch and decision makers in other government entities maby be downloaded here: