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As Ed Lazear points out in his recent e21 article, more federal spending means more debt, which is likely to negatively impact private sector innovation. But what about innovation in the public sector? There we have good news and bad news.
First, the bad news. Our current spending trajectory is totally unsustainable. Even before the recent expansion of spending by the federal government, projections indicate that federal entitlement spending alone will outstrip all projected federal revenues at current tax rates by 2050. Many states, most notably California, are currently depending on the federal government to fill in multi-billion dollar budget gaps. Very soon, the federal dollars will disappear, but the serious budget gaps will remain at all levels of government.
We have promised ourselves far more government than we will be able to afford. A future of federal budget shortfalls is unavoidable given the structure of our entitlement programs and the gruesome math of our demographics. This is grim news for state and local governments.
Change is inevitable. Embracing major shifts in policy and practices won’t be an option for state and local governments – it will be a necessity. Governments will find themselves looking to cut programs and raise revenues even more than they have during this recession.
Now, the good news.
Tax hikes and service cuts aren’t the only answer. The ugly budget math means the impetus for public sector innovation has never been greater. Instead of higher taxes or fewer services, a third option – greater efficiency through innovation – comes into play.
Markets spur innovation naturally. Customers will flock to whoever makes the better mousetrap. Not so with public services, since government’s “customers” generally do not have any choices. If you aren’t happy with your local police department or public high school, you are out of luck. As a result, government lacks the painful feedback mechanism that companies in competitive industries face all the time.
As a result, those innovations that do occur in the public sector tend not to spread as rapidly as one might expect. While the technological revolution has fundamentally altered the way work gets done in the private sector, the public sector has lagged in making full use of the transformative power of data, communication, and networked approaches to service delivery.
In pockets of excellence, committed public official are taking steps that dramatically reduce costs and improve outcomes, but these changes do not necessarily reach scale. In government, the “political economy” drives choices, not the market economy. That’s why the current seriously unpleasant decisions provide the foundation for innovation – the public is fed up with government, and politicians are under pressure to deliver.
Despite ripe conditions for savings and increases in effectiveness in essentially every government agency in the U.S., public sector innovation does not spread easily. The economy is helping to change that.
There are pockets of excellence in government, where the creative use of technology is driving dramatic efficiencies. For evidence, consider some of the winners of this year’s Innovations in American Government competition, which we recently announced in our awards program at the Harvard Kennedy School of Government.
This year’s six award winners came from two states, two cities, one county and one school district. Topical areas spanned health, education, human services and the environment. But these creative programs had one thing in common: they all utilized data in creative ways.
As is often the case, these innovations took existing data and transformed it into actionable information, allowing public officials to deliver markedly better results.
These accomplishments created, combined and/or sorted data in new ways that both produced innovative breakthroughs and helped in the evaluation.
Chosen from an initial pool of nearly 700 applicants the, 2009 Innovations winners all used data to drive decision making and performance in ways that combine the best of private sector approaches with public sector requirements.
The Higher Education Initiative of Kingsport, Tennessee, revitalized a formerly depressed rustbelt region by improving the academic outcomes of its residents and adapting curricula to meet the workforce needs of the medical technology, healthcare, and information technology industries now moving to the area. The city launched a collaborative effort among the city, business and higher education leaders, evaluated current and strategic job opportunities with a thorough data-based examination of the local labor market. Many government funded job training programs provide unnecessary skills or train citizens for jobs that do not exist. Through data analysis, Kingsport developed a deeper understanding of the marketplace and helped this local government focus its investment in training for the jobs that could be, rather than those that used to be.
New Leaders for New Schools of the Chicago Public School District shows how rigorous commitment to performance measurement and accountability can drive results even in challenging circumstances. New leaders recruits from outside the education system high caliber principals to lead historically underserved and underperforming urban schools. New Leaders’ success depends on disaggregating data not just on student performance, but also principals and teachers as it provides high caliber principals to lead historically underserved and underperforming urban schools. The New Leaders for New Schools program reports improved proficiency scores and higher high school graduation rates of students.
Wraparound Milwaukee takes multiple, often inconsistent, government funded programs designed to support children with serious emotional issues and weaves them into a coherent managed care model that operates inside a budget. Milwaukee shows how better and cheaper can go together. As the country’s first government-operated managed care program for emotionally disturbed youth, the program’s individualized treatments allow youth to stay at home with their families instead of in arguably ineffective residential institutions. Wraparound Milwaukee reevaluated the outcomes the community desired – healthier outcomes for children with acute needs – and the costs of a fragmented approach to those needs. It then used data to commit to providing better service for a fixed fee allowing county officials to reign in out of control spending.
Only active citizens can create conditions that force government to support innovation. Absent that pressure, existing programs will grow; even those that are ineffective. Government can open up its information so that bloggers and others can focus a light on inefficiency and fraud. Accurate, real time data is also a cornerstone of the District of Columbia’s Data Feeds: Democratization of Government Data. Instead of producing edited, static reports detailing data that is outdated by press time, D.C.’s program is the first government initiative in the country to make virtually all current city government data available in real time, online, and in its raw form. The program reports increased civic awareness and improved government accountability to citizens.
At minimum, these creative approaches to local governance should influence legislators to support change and efficiency, even over entrenched interests. You can find more information about these and other winners here.
State and local innovation is also the focus of Better, Faster, Cheaper, a new Harvard Kennedy School website focused on government efficiency launched in partnership with Governing magazine. Policy that supports innovation in government is important for our nation’s long-term economic health. The Innovations in American Government Awards and Better, Faster, Cheaper website both highlight the innovators at all levels of government producing more public value for fewer taxpayer dollars. They will play an important role in our future.
Stephen Goldsmith is Professor of Government of Harvard's Kennedy School and is the former Mayor of Indianapolis.