The big audit.

• Author: McNeely, Dave
• Position: US national audit - Includes related articles

A hard-nosed Texan engaged in one of the biggest performance reviews ever in state government came up with ideas for pruning the Texas budget. Now he's showing the federal government how to do it.

Know this about the performance review of Texas state agencies that Comptroller John Sharp carried out in 1991, now being echoed in Washington: It doesn't sound pretty.

Right after Bill Clinton was elected president, Sharp, at Clinton's request, sent him a confidential memo outlining how the audit should be conducted. It concluded with this paragraph:

"This performance review will not work if it's seen as an exercise in compromise. It must take on sacred cows and bloated bureaucracies to convince everyone of its seriousness. It must do away with useless expenses and unproductive jobs. There must be a body count, a specific number of programs eliminated and teeth on the sidewalk. Jobs have to go, programs have to go and perhaps more importantly, enemies have to be publicly challenged and fought within the bureaucracy."

Whew. That doesn't exactly sound like "open covenants, openly arrived at," supposedly the watchword of democratic government. But Texas' hard-nosed tax collector, who spent eight years in the Texas House and Senate, told the Clinton administration that that's the only way an effective review can be done.

President Clinton has responded by setting up the national performance review, putting Vice President Al Gore in charge. "Our goal is to make the entire federal government both less expensive and more efficient," Clinton said in announcing the package in March.

He and Gore have borrowed Sharp's organizational and cost-cutting guru Billy Hamilton to help set up the federal audit. Hamilton, whose organizational genius Sharp credits with making the Texas performance review work, will assist federal auditors, who are working 18-hour days out of a "war room" in the White House to try to get the national review done by this fall.

New U.S. Senator Bob Krueger, the Texas Democrat who was appointed as an interim senator when Lloyd Bentsen became Clinton's secretary of the treasury, also got into the act. He sponsored legislation that authorized the federal performance review. (It is probably no coincidence that the man running his campaign to win the remainder of Bentsen's term was Greg Hartman, Sharp's top political aide, who was loaned to the Krueger election effort.)

Sharp notes that the team of auditors he assembled for the 1991 Texas audit came up with more than $4 billion of proposed savings with 1,000 recommendations in 195 areas of government. A federal audit could save the nation hundreds of billions of dollars, Sharp said.

The Texas performance review of 1991, and its sequel in 1993, are perhaps the biggest examples in the states of the new attitude toward "reinventing government." That attitude, preached as gospel by its scribe, Boston-based writer David Osborne, is spreading to all levels of government. His book, Reinventing Government, co-authored with Ted Gaebler, former city manager of Visalia, Calif., has become something of a bible for those seeking new ways for governments to operate.

Osborne and Gaebler preach measuring outputs from governments rather than inputs. They point out that traditional centralized systems respond to rising crime rates by giving more money to the police. "If they continue to fail, we give them even more," they write. "In public housing, we reward failure: Under federal funding formulas, the better a local housing authority performs, the less money it gets from HUD.

"Our tendency to reward failure has literally crippled our efforts to help the poor. Most of the money we spend on the poor--welfare, food stamps, Medicaid, public housing, housing vouchers, child care vouchers--rewards failure, because it goes only to those who remain poor."

The Clinton administration's interest in emulating the Texas performance review comes after officials from two or three dozen states have already been in touch with Sharp's office for some instructions on how they can do the same thing. But Clinton himself already had more than an inkling about the idea of measuring outputs rather than inputs. He wrote the foreword for Osborne's 1988 book, Laboratories of Democracy, that focused on new, imaginative programs going on in the states. One of the key chapters in the book focused on Clinton's efforts to improve education in Arkansas--including testing teachers and offering school choice options to public school students long before these were in vogue.

Sharp says that some of the innovations he championed are borrowed from Clinton. Sharp had hired Osborne as a consultant to his department shortly after taking office in 1991.

The idea for the Texas performance review was spawned while Sharp was running for comptroller in 1990, and while he was still serving on the oil-and-gas-regulating Texas Railroad Commission after his tenure in the Legislature. Sharp said the original idea came from his predecessor, the comptroller for 16 years, Bob Bullock, who was running for lieutenant governor. They began discussing the notion before either took his new post.

The Legislative Budget Board, which sifts...