Twenty-first century government begins with an organization that makes sense, an organization that works better and costs less.

Californians are builders and dreamers. We created the fifth largest economy in the world, with a gross state product of more than $1 trillion, while holding sacred our commitment to the stewardship of the land and its natural resources. We are quick to embrace new ideas and new citizens.

Californians are dynamic, adaptable, and always focused on the future. Our state is the birthplace of the Mars Rover, the Digital Age and the Biotechnology Revolution. California also has a history of agricultural excellence and efficiency that is the envy of the world.

But California’s state government is antiquated and ineffective. It simply does not mirror the innovative and visionary character of our state. Instead of serving the people, it is focused on process and procedure. It is bureaucracy at its worst—costly, inefficient and in many cases unaccountable.

Given California’s fiscal condition and the growing schism between the people and the institutions that are intended to serve them, Governor Arnold Schwarzenegger established the California Performance Review to conduct a top-to-bottom review of California state government.

At a time when so many people are being asked to make sacrifices, it is only right to look inward and see how we can preserve the essential functions of state government while putting in place principles that will save money and better serve the interests of the people of California.

Today, innovative companies and governments are flattening and restructuring their organizations, implementing best practices and using information technology to improve their performance and productivity. In contrast, California state government is an archipelago of isolated departments with overlapping and duplicative functions that serve as barriers to innovation and a performance culture.

The state’s organizational structure does not mirror California’s innovative and visionary legacy; in fact, it is characterized by:

• A lack of accountability;
• A lack of prioritization; and
• A lack of coordination.

Accountability assumes clearly defined lines of leadership, responsibility and authority. The lack of accountability in California state government is due in large part to the proliferation of programs with overlapping and duplicative responsibilities. Today, more than 20 state entities are responsible for education and workforce preparation policy, but none of these entities has direct accountability for preparing California’s current and future workforce for the jobs of today or tomorrow. The truth is, however, that even if all of these entities were successfully preparing Californians for high-wage jobs, that information would be anecdotal at best because California does not have a government-wide process for evaluating the performance and productivity of state programs.

This situation did not develop overnight. The recent budget crisis has simply made manifest what many already knew: our government is hopelessly outmoded, slow to respond and drowning in the outdated bureaucratic routines it created.

Prioritization is about making choices and it is essential given the ever growing demands on government to provide services to those in need while the resources required to do so remain limited. However, for governments to make budget decisions in a thoughtful way, outcomebased performance and productivity measures are essential. Unfortunately, these management tools are not currently being used.

There are some examples of the lack of prioritization in California that are so egregious, however, that sophisticated performance tools are not necessary. Currently, there are dozens of boards and commissions in the Department of Consumer Affairs that are responsible for regulating professions. Many are small and virtually all have overlapping and duplicative administrative processes. Other states have taken action to address similar inefficiencies, yet in California these boards and commissions linger on, well past the point at which they served a “pressing public function.”

The real challenge is that state government in California is a complex web of organizational entities and the reporting structure is so large—with 11 agencies, 79 departments and more than 300 boards and commissions—that it is difficult to focus on strategically important information and initiatives or to assess program performance. The professional licensing function referenced is but one box on the organizational chart that depicts the current structure of California’s Executive Branch (see Exhibit 1).

The Legislature has also assigned hundreds of individual programs to the Executive Branch. Many of these assignments may have made sense at the time, or in the single context in which they developed, but today the totality of these programs has become a drain on the efficiency of government. At the same time, these additions and compromises have resulted in a government that only makes sense to the special interests, the experts on getting things done within the maze that is the bureaucracy, to the detriment of the people of California.

Coordination is essential if government is to leverage its resources to improve the lives of the people of California. Yet, in the Health and Human Services Agency, redundant information about clients is collected by multiple departments and stored in 60 different computer systems. There are logical efficiencies that could be achieved if these systems were coordinated. Unfortunately, obvious system improvements have been put off due to bureaucratic inertia and a tendency to focus on narrow program needs rather than agency-wide requirements.

The need for a new organizational framework is also highlighted by the impending human capital crisis that is facing California state government. In the next three to five years, more than one-third of the state’s workforce is expected to retire (more than 70,000 people). In the senior civil servant ranks, the challenge is even more pronounced as 67 percent of these employees are currently eligible for retirement.

To address these problems and meet the challenges of the 21st century, a new organizational framework for California state government is necessary.

Specifically, this framework should be guided by two principles:

• Programs should be aligned by function. Similar and related activities should be brought together to identify duplication of roles and share best practices. This will improve the effectiveness, impact and overall performance and productivity of state government; and
• Administrative services should be consolidated. Common internal services, like human resources, purchasing and accounting, should be consolidated to achieve economies of scale and reduce duplication.

It is important to underscore that the goal of these changes is not to eliminate state jobs. The Executive Branch and the Legislature have worked in recent years to resolve California’s fiscal crisis through policies that cut state employment or limited its growth. While these policies were deemed necessary during the peak of fiscal adversity, they did not address the fundamental problems that the recommendations of the Performance Review and this new organizational framework will solve.

This framework, depicted in Exhibit 2, has five elements:

1. Abolishes more than 100 boards and commissions;
2. Establishes an office to oversee statewide operational activities;
3. Consolidates the administration of motor vehicle, corporate and personal income taxes under the authority of a single commission;
4. Centralizes independent community service and volunteer programs in one organization; and
5. Realigns the existing agencies and departments into 11 integrated departments.

The following are the integrated departments proposed within this framework:

• Health and Human Services;
• Education and Workforce Preparation;
• Labor and Economic Development;
• Public Safety and Homeland Security;
• Environmental Protection;
• Infrastructure (including energy, housing, transportation routes and water);
• Natural Resources;
• Commerce and Consumer Protection;
• Correctional Services;
• Food and Agriculture; and
• Veterans Affairs.

Specifically, this framework drives toward performance-based government through an Executive Branch that is:

• Accountable and accessible to the people;
• Strategically oriented and focused on productivity;
• Reflective of the priorities and values of the people of California; and
• An efficient user of taxpayer dollars.

At its heart, this organizational framework efficiently structures government to meet the demands of modern California and aligns functions as closely as possible to the major purposes of state government. This framework eliminates significant areas of duplication and clearly aligns responsibilities.

The subsequent chapters of this report discuss the reasoning for this organizational alignment (further discussed in specific issue papers), the benefits this reorganization should derive, as well as the specific management goals and functions of the proposed departments.

The people of California know that government plays a vital role in our state’s economy. They want government to build roads, provide public schools and apprehend and rehabilitate criminals. They want a government that provides for society’s most vulnerable members— children, the elderly, the disabled and the economically disadvantaged. By the same token, they do not want a government that is wasteful, inefficient or a drag on the economy.

California faces great challenges and great opportunities for reform.

Some people honestly believe these difficult times are the proof that California’s best days are behind us. We fundamentally reject that idea.

California is tomorrow. Our brightest days are ahead of us and this great state is still the home to millions of hopes and dreams. But to get there, our government must change to reflect the demands of our modern world.

This framework is an important first step towards establishing a government that serves the people, a government that embraces innovation and demands accountability.

The process of implementing this new framework will not happen overnight, but when the transformation is complete Californians will have the first 21st century government in America.

Back to Top