Radical Revamp of State Bureaucracy

By Peter Nicholas and Robert Salladay

July 30, 2004 12 AM PT

Times Staff Writers

SACRAMENTO — A panel created by Gov. Arnold Schwarzenegger is proposing a top-to-bottom overhaul of state government that would leave virtually no piece of the state’s sprawling bureaucracy intact.

It would wipe out more than 100 boards and commissions, consolidate a tangle of state services and give departments fresh mandates in an ambitious bid to make government leaner and improve its performance, according to a copy of a report obtained by The Times.

In the most intimate of ways, the plan would influence how Californians live their lives. It would change the cutoff date for entering kindergarten; the method in which people answer questions on driver’s license exams; the size of jackpots collected by lottery winners; and the procedures for officially complaining about a bad haircut.

The sweeping recommendations, which have not yet been embraced by the governor, are expected to become a target for interest groups and to face major obstacles getting through the Legislature.

If enacted, the plan would greatly concentrate power in the governor’s hands while saving $32 billion over the next five years, in the review panel’s estimate.

The proposals are spelled out in a 2,547-page report prepared by his California Performance Review, a team of more than 275 specially appointed state employees, administrative officials and outside consultants who have spent the past five months working largely in secret, evaluating California’s government as part of the governor’s promise to “blow up the boxes” and create a more streamlined bureaucracy.

“California’s spirit is alive and well, but in one vital area the state is ailing,” reads the report, which is due to be formally released next week. “Once the envy of the nation, today our state government fails the people of California, and it fails the men and women who have given their careers to its service.”

Many of the thousands of proposed changes aim to make government more manageable -- to logically organize a state bureaucracy that now relies on hundreds of agencies, departments, divisions, boards and commissions, many with duplicative or overlapping jurisdictions.

The plan is certain to face challenges on ideological as well as pragmatic fronts -- from appointees who stand to lose power, legislators uncomfortable with the expansion of executive authority, advocates who object to shrinking government and analysts skeptical of the billions in projected savings.

Nothing on this scale has been tried in decades. Paul Miner, Schwarzenegger’s deputy Cabinet secretary who is one of the leaders of the California Performance Review, has said there has not been a study this sweeping in scope since one conducted under former Gov. Ronald Reagan in the 1960s.

“None of this will be accomplished ... through stopgap measures and half-hearted attempts at coordination,” the report reads.

Of 339 boards and commissions, a total of 118 would be abolished -- doing away with 1,153 appointed positions.

One example: Tax-collecting powers are now divided among three agencies -- the Franchise Tax Board, the independently elected Board of Equalization and the Employment Development Department. All three would be combined into one agency.

The plan is to be formally presented to Schwarzenegger on Tuesday. One recommendation endorsed in the report by the governor’s wife, Maria Shriver, would require students at public colleges and universities to participate in community service.

Rob Stutzman, the governor’s communications director, said: “What you will see on Tuesday is a report and recommendations, and the administration will be evaluating it and will take public input.”

Schwarzenegger has created a 21-person commission that will hold five public hearings on the report throughout the state in August and September. The proposed government reorganization will go to the Little Hoover Commission, which will make recommendations to Schwarzenegger and the Legislature. The governor is expected to send a final version of the plan to the Legislature next year.

“In order for it to get the green light from the Legislature, it’s got to be close to perfect,” Assembly Speaker Fabian Nunez (D-Los Angeles) said. “And if it isn’t, I think it’s going to run into a lot of problems.”

Here is what the plan would do in certain areas:

* Transportation, water, energy and housing

A department would be created that controls all decisions about state infrastructure -- transportation and housing projects, school construction, energy, telecommunications and the safety of waterways. The Infrastructure Department would consolidate functions now spread across 25 bodies -- including Caltrans and the Department of Water Resources.

* Health and human services

One of the state’s most expensive tasks -- $26.4 billion in public health and welfare programs -- would be streamlined, giving more responsibilities to counties and allowing private contractors to conduct work now done by government employees. The report calls for “sweeping change in financing and delivery of healthcare services to children.”

County child-support agencies would be eliminated, and private contractors would have to compete with local agencies for contracts to handle 1.8 million cases, the report recommends.

Free food for young mothers through the state-run Women, Infants and Children program, would be distributed through electronic cards instead of vouchers. Welfare and Medi-Cal applications would be processed on the Internet and through the mail.

The changes would move the Department of Managed Care under the authority of a Department of Health and Human Services and would create a Center for Public Health that would centralize planning and risk assessment, including scientists now working for Cal-EPA analyzing the risk of toxic chemicals.

* Education

The report says California is paying a high cost by not doing a better job of educating its workforce. It recommends a wide array of changes to save money. The plan would revise the rule that three of every four community college instructors be full-time. It recommends that teachers of career and technical courses be excluded from that ratio.

The report also urged Schwarzenegger to seek a constitutional amendment to abolish county superintendents of schools and county education boards.

The panel would change the cutoff date for kindergarten from Dec. 2 to Sept. 1, on the theory that children who enter kindergarten before they are 5 do not develop as well. The measure would affect at least 90,000 children.

* State budgeting

All major decisions on managing the state’s fiscal affairs would fall under the director of a new Office of Management and Budget -- a key recommendation to change a system the commission harshly criticized as inefficient and wasteful. “The governor and the Legislature do not have access to the information necessary to make strategic decisions,” the report states.

The key agencies that oversee state finances -- departments of Finance, General Services and the state personnel board -- “should collectively serve as the backbone of state government, yet the functions they perform are so fragmented that strategic management and efficient operation is currently impossible,” the commission concludes.

The commission would replace them with the Office of Management and Budget. It also would oversee technology and regulatory affairs and take over responsibilities of the Department of General Services.

The report also recommends the state budget, which is the subject of acrimonious haggling each year, cover two years -- as 21 other states do. The report said the current annual budget “creates great pressures on all budget staff and policymakers” and other problems. “Important state programs are interrupted and services postponed. In addition, small and large businesses alike suffer because the state does not pay its bills on time.”

* Law enforcement

The proposal calls for melding dozens of law enforcement agencies and offices sprinkled throughout the bureaucracy into a single department, where, the panel said, a coordinated response to crime, terrorism and natural disasters would provide better protection to the citizens of the state. Included under the umbrella of the new department of Public Safety and Homeland Security would be the California Highway Patrol, Alcoholic Beverage Control enforcement and environmental investigators, among others.

* Environment

The plan creates a new Department of Environmental Protection that would usurp powers now held by various boards, including the Air Resources Board and the Department of Forestry and Fire Protection, which would be abolished.

“The members of these boards and commissions are not accountable to the secretary or the governor. As a result it is difficult to implement a coherent environmental protection policy,” the report says about the 16 legislatively created boards and commissions that now regulate the environment.

* Consumer protection

The commission would eliminate dozens of licensing boards that now regulate conduct of professions such as doctors, dentists and barbers. The licensing responsibilities now split among more than 45 agencies would be assumed by the new Department of Commerce and Consumer Protection.

“The multitude of boards and commissions increases the risk that the board members can be unduly influenced by the industry the board is supposed to regulate, accepting lax standards instead of protecting consumers,” the report says.

This new department would also oversee gambling, the lottery and horse racing, eliminating the horse racing board. Almost all functions of the state Department of Motor Vehicles would also be under the new agency. The commission also recommended that drivers be allowed to renew licenses via the Internet.

As proposed, the California Lottery would join with several other states to pool jackpot earnings, such as the Mega Millions lottery shared by 11 states, including New York and Virginia. Jackpots would undoubtedly skyrocket with a state as large and wealthy as California joining the pool. The Mega Millions jackpot, for example, once reached $363 million.

Times staff writers Jordan Rau, Marc Lifsher, Evan Halper, Miriam Pawel and Gabrielle Banks contributed to this report.

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The plan’s impact

Among recommendations of Gov. Arnold Schwarzenegger’s California Performance Review:

* Eliminate 118 boards and commissions and 1,153 appointees.

* Allow Californians to renew driver’s licenses, apply for welfare and conduct more state business by computer.

* Join multistate lottery.

* Abolish county superintendents of schools and county education boards. Delay entrance to kindergarten for 90,000 children a year.

* Phase out state air quality board, which monitors smog.

Los Angeles Times