Expand the General Services Commission s Mission to Provide a Full Range of Central Administrative Services

Enable state agencies to concentrate on their missions and core functions by expanding the responsibilities of the General Services Commission (GSC) to provide a full range of administrative services for state agency customers.


Background
Rapidly changing technologies and the increasing amount of available information provide Texas government tremendous opportunities. To take advantage of these opportunities and to function effectively and efficiently in a complex environment, government must employ experts in more diverse and specialized fields than ever before. This challenge is particularly evident in the state s administrative services arena.

Texas government s administrative functions are many and varied. They include, but are not limited to: recruiting and training, managing inventory and assets, providing mail, printing and data processing, managi ng records, purchasing equipment, maintaining assets, leasing and renting space, constructing buildings and others.

At one time, in a small agency, these functions could be managed by a multi-skilled business manager. But today, with complex federal and state laws affecting agencies, agencies often find a need for specialized human resources personnel, trainers, interna l auditors, equipment operators, facilities construction managers, information services managers and other experts to ensure the state complies with all regulations.

For example, cost variations and technologies for handling an agency s mail have evolved to the point where an employee must know about the best equipment for the job, the opportunities for securing the best postal rates and new technologies. Even the larg e state agencies with more administrative specialization experience gaps between the available technologies and existing capabilities.

Shrinking financial resources reduce each agency s ability to keep up with state-of-the-a rt improvements and to comply with all legal requirements, even when such improvements could mean savings or other efficiencies. Each improvement opportunity often brings with it new training requirements, which also can raise costs.

In 27 states, a broad range of administrative services are provided through Departments of Administration, which are, in effect, service bureaus for other state agencies. A survey of these states by the Texas Performance Review found that agencies of this type can develop ex pertise in specialized areas which then can be made available to all other state agencies. This is more cost-effective than having every agency hire their own experts. It also helps ensure that smaller agencies, which cannot employ as many experts, can sti ll have access to them.

For example, small agencies cannot always efficiently hire grievance and mediation experts, trainers, postal experts and others, yet the cost or risk to an agency from not having access to these experts can be considerable. Anothe r benefit of a central service agency is that it provides greater accountability over the state s assets through an improved ability to measure the costs of services.

According to the book, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector: Most governments have no idea how much it costs to deliver the services they offer. Even if they can give you a budget figure for each service, it typically excludes indirect costs such as administrative overhead, capital cost s and employee fringe benefits. One study of 68 cities found their true costs to be 30 percent higher than their budgeted costs... 1

An example of how a central service agency can make more informed business decisions because the total costs are known is the case where expensive equipment must be procured each time technology improves or other more efficient means develop for conducting a function. One agency can keep up with these opportunities, replace equipment, monitor productivity levels and avoid the overlapping that would occur if the oversight were spread among a number of separate agencies.

Other savings also can be achieved when various economies of scale are realized through bulk purchases or other bulk rates that stem from combining the administrative functions of several agencies. Perhaps the greatest advantage is that an administrative s ervices agency frees up other agencies to concentrate their resources on their core functions while being assured their administrative functions are carried out in compliance with existing laws. Table1 shows the types of functions that typically are carried out by other states departments of administration.


Table 1 - Selected Functions of State Departments of Administration

Materials Management Information Management
Facilities Management- Land, Buildings, Grounds State Libraries and Archives
State Vehicle Fleet Management Optical Transmission
Purchasing/Competitive Cost Review Telecommunications and Statewide Network
Other Services (Printing, Machine Repair, etc.) Applications
Mail and Messenger Services Centralized Information Resources Management
Environmental Management Interstate Government Cooperation
Facilities Construction Management Data Facilities Management
Space Management, Leasing and Rentals Sale of Mailing Lists

Personnel Management
Strategic Planning (Workforce 2000 Issues)
Automated Human Resources/Payroll Systems
Applicant Database/Resume Scanning/Standard Application
Recruitment, Selection and Affirmative Action Classification
Performance Evaluations/Measures
Centralized Training and Development
Grievance, Appeals and Labor Relations
Mediation Services
Benefits/Retirement Programs
Wellness/Employee Assistance Programs

Source: Texas Performance Review, Telephone Survey, Fall 1992.


Texas has a limited version of a central services agency in the General Services Commission; however, this agency generally focuses on such activities as building and property services, purchasing, telecommunications, travel and, for some agencies, mail an d messenger services. Texas does not have a business manager for the state s administrative services, who is authorized to analyze the overall effectiveness and efficiency of the state s administrative functions.

The result is that each agency makes decisions about its administrative functions based on what is best for the agency and not necessarily on what is best for the state. Decentralized operations do not always operate at full capacity and cannot always get the best prices. Table 2 shows three major functional groupings usually seen in departments of administration and the status of such functions currently in Texas. The table suggests the level of duplication of many of these services.
Table 2 - Common Central State Administrative Services and the
Distribution of Responsibilities in Texas, Fiscal 1993

Materials Management

Facilities-Land, Buildings, Grounds State Vehicle/Aircraft Fleet Management
General Land Office General Services Commission
General Services Commission Aircraft Pooling Board
Department of Transportation Various other state entities
Texas Department of Criminal Justice
University of Texas System Purchasing
Texas A&M University General Services Commission
Various other state entities Department of Information Resources
Virtually every state entity
Mail and Messenger Services
General Services Commission (Messenger) Printing
Virtually every state entity (Mail) Virtually every state entity

Information Management

State Libraries and Archives Telecommunications
Library and Archives Commission Department of Information Resources
Various state agencies and universities General Services Commission
Comptroller of Public Accounts
Optical Transmission
Department of Information Resources Information Resources Management
General Services Commission Department of Information Resources
General Services Commission
Interstate Government Cooperation Various state agencies and universities
Various state agencies and universities in specific areas

Personnel Management

Automated Human Resources/Payroll System Performance Evaluations/Measures
Comptroller of Public Accounts All state agencies and universities
Human Resources Information System (HRIS)
Uniform Statewide Payroll System (USPS) Training and Development
Governor s Office
Classification Virtually every state agency and university
State Classification Office
Various colleges and universities Workforce 2000 Issues
No statewide planning/coordination
Benefits/Retirement Programs
Teacher Retirement System/Optional Retirement Program Legislative Liaison
Employees Retirement System of Texas Some state agencies and universities
State Pension Review Board
Comptroller of Public Accounts Recruitment and Selection
Fire Fighters Pension Commissioner Every state agency and university
Ranger Pensions
Attorney General Grievance, Appeals, and Labor Relations
Various other agencies and universities Some state agencies and universities

A centralized administrative services agency that is charged with making certain business decisions for the state does not automatically imply that agencies will relinquish administrative functions. Centralization should only occur when the cost and service benefits are obvious. Many functions will remain decentralized to keep the state responsive to customers needs.

Large corporations may staff each quasi-independent business unit with a core of human resource personnel to help in hiring and screening activities, for example, but may offer a standard personnel manual for all units. This saves each unit from reinventing the wheel and duplicating functions; this also ensures standardization. The largest units may each operate a print shop that continuously runs at capacity while small subsidiaries may obtain print services from any of the existing print shops . The key is that the organization can examine the services as a whole and allocate resources efficiently.

Current management literature has stressed two principles critical to effective operations that have not yet been prevalent in Texas. The first pr inciple is a focus on customer service. To be successful, a service agency must strive to bring the best administrative practices and technologies to its customers in this case, other agencies to meet or exceed their quality expectations and their expected time frames.

The second principle is competition. One way to build competition into the state s services is to require the service bureau to recover the costs of its direct services to agencies through fees. Minnesota s Department of Administration has reduced funding from the state s general fund to less than 20 percent of its total operating budget by market pricing its products and charging state agencies for its services. Agencies, in some cases, have the opportunity to shop around for the best buy and use the central agency only when they are competitive. If there is not adequate demand for a service, the central agency puts that service out of business. Nevertheless, government can never function in a purely competitive environment. There may be times when the state must make a business decision to treat a particular function as a utility and require that all agencies participate to enable the state to operate consistently and cost-effectively.


Recommendation
State law should establish the General Services Commission (GSC) as the business manager of the state s administrative services.

Under this recommendation, GSC would expand its role as a service bureau to state agencies without changing the composition of the commission. State law would require the commission to determine the administrative services conducted by state agencies in Texas that could be provided in a centralized manner at a savings without sacrificing quality or timeliness. The agency would have the authority to make recommen dations to promote efficiency in state administrative support services.

The law would make GSC responsible for commercial business activities other than those specific to carrying out governmental programs. Administrative services would be defined as al l administrative support services for agencies and political subdivisions which include but are not limited to such diverse areas as state construction, energy management, vehicle fleet management, purchases of goods and services, central stores, surplus p roperty, mail services, printing and publishing services, records management, mailing lists, facilities management, building and grounds maintenance, data facilities management, travel and transportation management, personnel services, training, dispute re solution, telecommunications and information services. The law also would authorize the agency to analyze any administrative services to enable the state to make better business decisions about providing services in the future.

An example where the state is already realizing the benefits of centralization of administrative services is the State Travel Management Program. GSC estimated that during fiscal year 1991, this program saved the state a total of $5.6 million in airline fa res as well as more than $305,000 in rebates from just one travel agency. 2 The law would additionally require the commission to report its findings and recommendations in a report to the 74th Legislature. The report should include a plan for reducing the general revenue funding of the agency and establishing fees that would be c harged to agencies using the services. The plan could involve a gradual transition to a fee-for-service operation if the commission found that this would be the best business approach.

Other recommendation s in this report would require the newly-defined commission to serve as the business manager of particular administrative services, such as certain mediation services for state agencies, mail operations, personnel functions and training coordination. With regard to these services, study has already shown that considerable benefit to the state would occur if these services were managed as a whole by one business manager.


Implications
These recommendations would result in one state administrative business manager, charged with finding ways for state agencies to receive state-of-the-art services at the most reasonable cost. The newly structured agency can examine what is best for the state as a whole. This recommendation, if implemented, does not mean that a ll administrative services would be centralized. If a state agency can run administrative operations at full capacity without adverse fiscal effect to the state, such operations should not be significantly altered.

Small agencies would be able to access a range of specialized services that they cannot now afford to retain in-house and often must contract for, or do without. With an administrative services agency, agencies might have access to already-developed standard personnel manuals, grievance or media tion services, application processing, data services and more, without automatically resorting to expensive, private sector services.

The changes discussed in this recommendation will require a significant refocusing by GSC toward serving state agencies as customers and running as efficiently as a private sector business would.

GSC has recently initiated a program of continuous quality improvement, strongly emphasizing customer service. This initiative should set the stage for a more comprehensive effort. Finally, the state should realize benefits from being able to help all agen cies, including small ones, consistently adhere to sound business practices.


Fiscal Impact
This change could result in significant savings because of greater bulk buying of sup plies, volume discounts for various services, a reduction in duplicated functions and the best use of scarce resources. In addition, moving more fully from general revenue funding to a fee-for-service structure should drive GSC to be competitive and prompt the state agencies to shop for services they need. Other recommendations will set out projected savings from specific changes that can be made within this newly-defined agency.



Endnotes
1 David Osborne and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (Reading, Massachusetts: Addison-Wesley Publishing Company, 1992).
2 General Services Commission, State Travel Management Program, Monthly Travel Report (June 16, 1992).