FLASHREPORT

COMMON SENSE GOVERNMENT: DOING MORE WITH LESS

Insurance Commissioner Steve Poizner

[Publisher's Note: As part of an ongoing effort to bring original, thoughtful commentary to you here at the FlashReport, I am pleased to present this column from California State Insurance Commissioner Steve Poizner - Flash]

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When I took the helm at the California Department of Insurance (CDI) in January 2007, I was immediately confronted with a multi-million dollar structural imbalance.

Much like the rest of state government, CDI was spending more than it was taking in. The Department of Finance and others recommended that I simply raise fees.

Raising fees was the traditional approach to budget issues at the Department. Over the previous decade my predecessors had raised rates about every 3 years. During this period fees increased by more than 25 percent.

But I decided to take a different approach.

Working with my management team, I developed a strategic plan with one simple goal: to make CDI the best, and best run, consumer protection agency in the United States . To do so we asked a few basic questions: What were CDI’s priorities and core responsibilities? Was CDI structured in the best way possible to carry out its mission? Did we have the right people in the right places? Were there ways to increase efficiencies?

The first part of our strategic plan was to initiate a top-down review to examine how every dollar was spent and how every unit operated. We followed this by conducting a business process survey to identify ways to streamline operations and increase efficiencies. I then sat down with my senior management team to finalize a plan that would make CDI leaner and more efficient.

The result of the 18-month process not only allowed us to fix the multi-million dollar structural imbalance, it also allowed us to permanently reduce our operating budget by 10 percent without terminating employees or cutting salaries. To put this in perspective, this is more than the savings requested under the governor’s furlough plan – and it is permanent, not temporary.

It’s important to note that we didn’t undertake this exercise because there was a recession or the state had a budget deficit. In fact, there was not state budget crisis when we began. We simply did it because it was the right thing to do.

I spent 20 years starting and running companies in the Silicon Valley and I learned a few lessons there. Strategic plans, top down reviews and business process surveys were routine. In the private sector, they are the rule – not the exception.

Why? Because we were responsible to our investors and needed to manage our money wisely. I believe state government must do the same for our investors – the taxpayers.

We need to change the attitude of those in Sacramento . Raising taxes or fees is too often the first choice, not a last resort. This must change. My experience in Sacramento has taught me that government is fundamentally different from the private sector. There are, however, many lessons that it can learn from the business community. Effective management of resources is one.

I was surprised that our 10% reduction received the positive attention it did. I certainly hope that the time will come when streamlining government and increasing efficiencies will be common practice rather than news. 
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Steve Poizner was elected Insurance Commissioner of California in 2006.  He is a candidate for the Republican nomination for Governor in 2010.

Department of Insurance Website
Poizner for Governor Website

You can write to Insurance Commissioner Poizner, via the FR, here.