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Texas Performance Review
Home Improvements
A Manual For Conducting Performance Reviews


Anyone active in the public sector knows that America's state and local governments are facing lean financial times. Recession, federal cutbacks and a spiraling demand for services have squeezed many state, county and city budgets to the breaking point. State and local governments have raised tax rates to new highs without significantly improving their financial condition.

Faced with such pressures, state and local leaders must choose between unpalatable options: Should they reduce vital services in areas like crime prevention, indigent health care and affordable housing? Or should they impose tax increases on a hard-pressed and increasingly rebellious electorate?

But there's a third option: the performance review. In recent years, the performance review has become an increasingly popular management tool among America's state and local governments. Performance reviews allow innovative managers to break out of "tried-and-true" patterns and find new and better ways to do business in an era of tight funding and limited staffing.

A performance review does not require a massive commitment of resources. It does require a hard, objective look at policies and operations, and the political will to change long-established programs if they prove to be obsolete.

The Texas Performance Review
The Texas Performance Review (TPR) was created by the Texas Legislature in January 1991. TPR's mission is to identify and recommend changes in state government that could save money while improving services.

TPR deliberately tries to avoid the preconceived ideas that had previously hobbled most studies of this type. In keeping with its charge to "challenge the basic assumptions" of government, TPR's goal is not only to improve existing systems, but to devise new and better ways to provide government services.

The Legislature gave authority for TPR to the state's Legislative Budget Board, which in turn designated State Comptroller John Sharp as leader of the review team. Comptroller Sharp assembled a staff of more than 100 auditors, research analysts and other specialists from 16 state agencies and the private sector; in all, the TPR team devoted about 54,000 hours to the initial review effort.

In addition to staff research, TPR sought ideas and information from state workers and the general public. The Comptroller's office installed a widely advertised toll-free telephone hotline to collect suggestions and solicited state employee input through notices in pay envelopes and other media. Nine public hearings held throughout the state generated more recommendations.

TPR examined the organization, management and programs of Texas' entire state government. TPR staffers identified opportunities for reorganization, consolidation and the elimination of duplicated functions. The review studied the state's fiscal management systems and debt policies. Team members recommended automating certain government operations and privatizing others. The team also studied ways to increase Texas' federal aid and considered changes to the state revenue system that could increase income without raising existing taxes or levying new ones.

The June 1991 TPR report, Breaking the Mold: New Ways to Govern Texas, detailed nearly 200 proposals touching on every facet of state government operations. Some recommendations promised to increase government efficiency but would produce only minor savings; others even called for higher spending. But in all, the TPR proposals were estimated to improve the state's general revenue outlook by about $4 billion during the 1992-93 budget period.

The TPR report significantly altered subsequent state budget negotiations. Some proposals, particularly those calling for the consolidation of state agencies, became the center of lively debate. Many suggestions failed to survive the resulting tug-of-war between competing interests. Ultimately, however, the Legislature adopted nearly two-thirds of the TPR proposals, slicing some $2.4 billion from the potential shortfall in general revenue and sharply reducing the size of the tax increases needed to balance the state budget.

This success led the Legislature to authorize Comptroller Sharp to maintain TPR as a permanent division of the Comptroller's office. Since then, TPR has conducted a series of in-depth reviews of individual state agencies and local school districts throughout Texas, producing recommendations to streamline operations and save millions in taxpayer dollars while improving service and employee morale.

In 1993, TPR completed its second major review of Texas state government. The resulting report, Against the Grain: High Quality, Low-Cost Government for Texas, analyzed nearly 200 different subject areas within state government and offered about 460 specific recommendations for the Legislature. About 95 percent of these were new proposals not discussed in Breaking the Mold. Against the Grain generated nearly 130 related bills in the 1993 legislative session, touching on about two-thirds of TPR's proposals. Legislation enacted as a result of Against the Grain increased Texas' general revenue by more than $3.8 billion (about 85 percent of TPR's suggested savings) during fiscal 1994 and 1995.

TPR's third major report, Gaining Ground: Progress and Reform in Texas Government, was issued in November 1994. Gaining Ground's complete package of recommendations would generate $1.9 billion in general revenue and $2.1 billion in all funds over fiscal 1996 and 1997; at this writing, proposals representing about 90 percent of these savings have been incorporated in active legislation.

The usefulness of TPR's methods is not limited to Texas state government. In the years since its creation, TPR has served as a model for review efforts in other Texas agencies and other state governments. In addition, TPR provided guidance and support to the National Performance Review headed by Vice President Al Gore. TPR is convinced that any government can adapt TPR's methods and procedures to make its operations more cost-efficient and more effective. This manual shows how.


What is a performance review?
A performance review is an evaluation that challenges the purpose, operations and policies of government. The review can be applied to an entire government, a single agency or a program involving multiple agencies. Its goal is to find ways to save money, increase efficiency, eliminate waste and improve customer service.

A performance review is not merely a financial audit, although examining an organization's finances is one valid review technique. An audit simply determines whether an organization follows proper accounting standards. A performance review focuses not only on cost savings, but also on the efficiency and effectiveness of operations and service delivery--qualities that can't always be measured in dollars. A successful review identifies ways to work better as well as more cheaply. This emphasis on effectiveness is central to the TPR method.

Naturally, efforts to streamline and improve government are nothing new; some elements of TPR's methods, however, are unique to the organization. TPR generally works within a very compressed time frame. Each of TPR's three major performance review reports were completed within five to six months. Furthermore, TPR is directed by a single individual, as opposed to a commission or board.

Since Comptroller Sharp is ultimately responsible for explaining and defending TPR recommendations, he has set the following objectives for TPR:

  • to examine state government's organization and management and recommend consolidation and reorganization where appropriate.
  • to evaluate state agency programs and policies to identify overlapping functions and outmoded methodologies.
  • to examine state government's fiscal management practices and the financial relationships among state agencies.
  • to recommend basic principles of debt management policy for the state.
  • to identify opportunities for improvements in the management of state government's daily operations.
  • to identify programs and services that could be transferred to the private sector.
  • to examine work force issues, including benefits provided to state employees.
  • to identify advances in technology applicable to state government functions.
  • to explore ways of increasing federal funding received by the state.
  • to consider changes to the state's revenue system to increase government income without changing the rates or bases of the state's major taxes or adding new tax sources.
These objectives guide every TPR review.

TPR reviewers keep "customers" central to the review's purpose and objectives. Their focus extends beyond immediate problems to anticipate the future needs of government and its citizens. A performance review should help articulate the management philosophy an organization needs to meet these challenges.

This manual is a blueprint for conducting performance reviews. There are a number of performance review methods, of varying scope and complexity; the organization can select the approach that fits best. The beauty of the performance review technique is its adaptability.

Home Improvements contains strategies and tactics for all parties involved in a performance review. The key players include:

  • government leaders seeking to initiate a performance review;
  • personnel assigned to organize and lead review teams;
  • analysts who serve on these teams, and
  • staff members of the agency or program under review.

A performance review can succeed only if all these parties cooperate with the review's objectives and commit themselves to its results.

To decide whether your organization would benefit from a performance review, consider the following questions. Their answers will help you determine the benefits your organization can expect and direct your attention to the areas most in need of review.

  • Are you looking beyond simple budget cuts? Can you rethink how the agency, program or activity in question does things?
  • Are any agencies, programs or activities failing to carry out their duties in the most efficient and effective manner possible?
  • Do some activities no longer serve a useful purpose?
  • Are tasks duplicated by employees or departments?
  • Are agencies, programs or activities over- or understaffed?
  • Could money be spent more wisely?
  • Is the agency, program or activity responsive to its customers?
  • Has the agency, program or activity come under strong public or legislative scrutiny?
  • Can the agency, program or activity try harder to identify and eliminate waste?
  • Does the agency, program or activity encourage employee suggestions?
  • Do communication problems exist between staff and management?

Perhaps the most important key to success in selecting a performance review topic is: Be bold. Be tough and honest in assessing programs and policies that aren't working. Go after the "hot spots"--these areas can yield the most dramatic results.

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