Government Executive - Authors - Jonathan Walters

Contention over Catastrophes

Jonathan Walters — Thu, 01 Dec 2005 00:00:00 -0500

Friction among state, local and federal disaster responders imperils recovery from emergencies.

When Hurricane Katrina hit New Orleans, only one thing seemed to disintegrate as fast as the levees that were supposed to protect the city: the relationships that are supposed to bond local, state and federal officials during and immediately after such a disaster.

But why?

The answer will have significant implications for the future of emergency response in the United States. Already, governors are lining up in opposition to the "federalization" of domestic disaster response. Yet some in federal government clearly feel that if they're going to be blamed for failures-failures they ascribe at least in part to state and local officials-then they'd prefer a system in which the federal government has the option of being much more pre-emptive. In fact, the federal role in U.S. disaster response and recovery has been increasing steadily, according to emergency management scholars. On April 22, 1927, President Calvin Coolidge named a special Cabinet-level committee headed by then-Commerce Secretary Herbert Hoover to deal with the massive flooding that ravaged communities up and down the Mississippi River Valley. The scene, described in John M. Barry's highly topical chronicle, Rising Tide: The Great Mississippi Flood of 1927 and How It Changed America (Simon & Schuster, 1998), arguably represents the beginning of the modern era of intergovernmental disaster response. It also represents the first clear attempt to politicize federal disaster response, with Hoover consciously riding his performance during the floods all the way to the White House.

The federal government began trying to formalize intergovernmental roles and responsibilities through the 1950 Federal Civil Defense Act, which defined the scope and type of assistance the federal government would extend to states and localities after certain types of disasters or emergencies (although Congress had been offering financial aid to states and localities piecemeal since the early 1800s). In 1979, President Jimmy Carter created the Federal Emergency Management Agency, in large part as a response to governors' complaints about the fragmented nature of federal disaster planning and assistance. And in 1988, Congress passed the Robert T. Stafford Disaster Relief Act, which outlined the protocols for disaster declarations and what sort of intergovernmental response would follow.

From 1989 to 1992, a succession of calamities, including the Loma Prieta earthquake in California and hurricanes Hugo in South Carolina and Andrew in Florida, highlighted the federal government's slow and bureaucratic response. These events also were teaching state and local governments plenty about their own emergency capabilities. The experiences led to the vaunted turnaround at FEMA with the appointment of James Lee Witt, the first director with actual state emergency management experience.

The increasing federal role in emergency readiness and response brought two results, says Tom Birkland, director of the Center for Policy Research at the Rockefeller College of Public Affairs and Policy. First, states and localities were getting hooked on federal money-especially for recovery. In addition, presidents also were discovering the political benefits of declaring disasters, which allowed them to liberally sprinkle significant amounts of cash around states and localities in distress. "That spending grew considerably under the Clinton administration," says Birkland. "And it created the expectation of federal government largesse. But federal spending was always meant to supplement and not supplant state and local spending."

All Emergencies Are Local

If the federal role in disaster response and recovery has increased-along with expectations of federal help-emergency management experts at all levels still agree on the basics of existing protocol: All emergencies are, initially at least, local-or local and state. "For the first 48 to 72 hours, it's understood that local and state first responders are principally responsible," says Bill Jenkins, director of the Homeland Security and Justice Issues Group at the Government Accountability Office, which is investigating intergovernmental response to Katrina. "The feds come in as requested after that."

The extent to which the local-to-state-to-federal response ramps up depends on a host of factors, including the size of the incident and the plans and agreements that are in place. It also very much depends on the capacity of the governments involved. Some are just more capable of dealing with disasters on their own and seem less inclined to ask for outside help. Others seem to hit the intergovernmental panic button more quickly. But whichever it is, say those on the front line of emergency response, the reaction of various governmental partners shouldn't be a surprise. Key players at every level of government should have a very good idea of what they will be called upon to do or to provide when a particular disaster hits.

Most important to the strength of the intergovernmental chain are solid relationships among those who might be called upon to work together in times of high stress. "You don't want to meet someone for the first time while you're standing around in the rubble," says Jarrod Bernstein, a spokesman for the New York City Office of Emergency Management. "You want to meet them during drills and exercises." New York, says Bernstein, has very tight relationships with state and federal officials in a variety of agencies. "They're involved in all our planning and all our drills. They have a seat at all the tabletop exercises we do."

During those exercises, says Bernstein, federal, state and local officials establish and agree on what their respective jobs will be when a big one hits. Last summer, for example, the city worked with FEMA, the Health and Human Services Department, the FBI and New York state health and emergency response officials on an exercise aimed at collecting 8 million doses of medicine and distributing them throughout the city in 48 hours. "We were looking at how we'd receive medical stockpiles from the federal government, break them down and push them out citywide. There is a built-in federal component to that plan," he says.

Point Fingers Everywhere

It's hard to figure out exactly what agreements or arrangements were in place in Louisiana prior to Katrina, in large part because state and local officials at this point don't seem to want to talk about them (numerous e-mails and phone calls to Louisiana, New Orleans and FEMA officials asking about response plans went unanswered). To the extent that some officials would talk-off the record-and from conversations with close observers, it is clear that intergovernmental relationships among FEMA, Louisiana and New Orleans were neither close nor formalized, and if people cared to point fingers, they could be pointed in all directions.

FEMA has come in for the most consistent and visible pounding, but more dispassionate observers think it's unfair that the agency be singled out. "[Former FEMA director] Michael Brown's comment that the Louisiana and New Orleans governments were 'dysfunctional' is right on the money," says Susan Cutter, director of the Hazards Research Lab at the University of South Carolina. "And you can add to that 'inexperienced.' "

For example, a tabletop exercise done in Louisiana last year called Hurricane Pam identified a huge gap in disaster planning in New Orleans: An estimated 100,000 people wouldn't be able to get out without help.

As is standard in emergency management planning and practice, it is the locality's responsibility-at least initially-to evacuate people, unless other partners are identified beforehand. Last spring, the city floated the notion that it would rely primarily on the faith-based community to organize and mobilize caravans out of the city for those without cars or who needed special assistance. The faith-based community balked, citing liability issues, according to a longtime New Orleans public policy analyst. The city never came up with Plan B-that is, until Katrina struck, when Plan B turned into a panicked plea for state and federal help as the floodwaters drove people toward the Superdome.

By contrast, John Pine suggests learning from Louisiana parishes with a record of responding smoothly and competently to disasters. "You look at places like Jefferson, Vermilion and Calcasieu," says Pine, who is Louisiana State University disaster science and management program director. "Those parishes are just extraordinary and have long cultures of excellent preparedness and excellent local government."

Robert LeBlanc, Vermilion's veteran director of emergency preparedness, says it's the parish's responsibility to get residents out of harm's way and his parish's emergency response plans assume no significant help from state or federal officials before-or for at least 48 hours after-a storm blows in and over. "When we declare an emergency, the first to get out are those with special needs and those in nursing homes and those in low parts of the parish," says LeBlanc. Depending on who is being evacuated, the parish uses everything from school buses to ambulances, all prearranged to go where they're needed and all covered by FEMA reimbursements because it's part of the parish's official emergency response plan. "New Orleans had 1,000 flooded school buses," LeBlanc says. "It had Amtrak offering to take residents out of there."

But if New Orleans had planning problems, then Louisiana also seemed to have troubles. In the fall of 2004, three top administrators with the Louisiana Office of Homeland Security and Emergency Preparedness were indicted for the alleged misuse of up to $60 million in FEMA mitigation planning money.

In the wake of the scandal, a fresh team was appointed to head the department, including a new operations director. Veteran Louisiana emergency management officials say extremely valuable institutional knowledge was swept out the door with the purge, including expertise in what to expect from, and how to work with, FEMA. "Three individuals key to that organization got caught up in that mitigation plan business and that was a great loss," says Vermilion's LeBlanc. The former deputy director for emergency preparedness, Mike Brown (no relation to the former FEMA director) "knew exactly what to do during emergencies," says LeBlanc.

Communication among the three levels of government before, during and after the event also was messy. Indicative of the problem was the struggle between New Orleans Mayor Ray Nagin and state and federal officials when it came to repopulating the city. "You have the mayor saying to residents 'Y'all come back,' and the feds are just exploding," says Peter Beering, terrorism preparedness coordinator for Indianapolis. "So the mayor is playing to his constituents and blaming the big bad feds for getting in his way."

Overlaying the uneven intergovernmental response were traditional tensions between Louisiana's capital, Baton Rouge, and New Orleans, including the fact that Nagin declined to support Kathleen Babineaux Blanco in her run for governor, even though both are Democrats. The extent to which such tensions played into the New Orleans fiasco is hard to judge, but nobody in Louisiana would describe the relationship between the two cities as close.

As further evidence of the fragmented nature of government and governance in Louisiana, Janet Howard, president of the New Orleans Bureau of Governmental Research, points out that there are three different groups doing separate analyses of what happened: the Louisiana legislature, the New Orleans mayor's office and the New Orleans City Council.

Such factionalism within Louisiana is clearly one reason some officials seem so keen on taking emergency management out of the hands of state and local government. And it isn't just frustrated federal officials who think a more forceful emergency response might be a good idea in some instances. Bill Leighty, chief of staff for Virginia Gov. Mark Warner, spent two weeks in Louisiana helping coordinate the state response. He says watching FEMA's actions versus the military's while he was in New Orleans suggests the strong need for an intergovernmental discussion of when a more aggressive federal approach is appropriate. FEMA's mind-boggling bureaucratic approach to every item it provided or action it took was, at times, brutally exasperating, says Leighty. "But when you tell the 82nd Airborne, 'Secure New Orleans,' they come in and they know exactly what to do and it gets done."

Even some longtime New Orleans residents, who watched helplessly as looters rampaged through parts of the city, say they wouldn't have minded at all if the military had stepped in to restore order. "There are times when people are overwhelmed," says Frank Cilluffo, director of the Homeland Security Policy Institute at The George Washington University, "and they don't care what color uniform is involved in coming to the rescue-red, blue or green."

Planning for the Last Disaster

States as a whole clearly are not going to go along with any emergency management plan that involves the federal government declaring something like martial law, though. Indeed, the National Governors Association in October issued a terse statement to that effect. According to the statement, NGA agrees there needs to be a thorough analysis of local, state and federal coordination for disaster response. "The possibility of the federal government pre-empting the authority of states or governors in emergencies, however, is opposed by the nation's governors," the statement says. Most states would much prefer to see existing protocols continued and FEMA restored to its former glory, when it was packed with experienced staff, well-funded and hard-wired to the West Wing.

Many simply question the whole idea of predicating a sweeping new intergovernmental policy on what happened in Louisiana. "It's true that we're always planning for the last disaster," says Cilluffo. Turning established intergovernmental emergency response policy on its ear based primarily on the experience of one state, one city and one disaster probably would be a mistake, he and other experts argue.

Still, the uneven responses to Katrina, and to a lesser degree Hurricane Rita, argue for a serious review, according to emergency responders. Emergency management response generally, and intergovernmental communication specifically, seemed better coordinated during Rita and Wilma, but both hurricanes highlighted continuing glitches.

The evacuation of Houston and environs in advance of Rita was poorly coordinated, argued David G. Wallace, mayor of Sugar Land, Texas. In testimony before the House Committee on Homeland Security, Wallace noted, "The decision to evacuate residents when Hurricane Rita was about to hit land was made by local governments, led by Houston/Harris County. The call to evacuate was not led by the state through a centralized process." Wallace argues that such a lack of coordination was a big part of the problem as a panicked procession of fleeing vehicles turned into one gigantic traffic jam.

In the wake of Hurricane Wilma, there were continuing signs of logistical problems with quickly getting adequate supplies into devastated areas, although Florida Gov. Jeb Bush noted that given the length of time between evacuation orders and when Wilma hit, residents should have been able to get out of harm's way or stock up on supplies.

The big difference among Katrina, Rita and Wilma is the former seemed to paralyze state and local officials, whereas during Rita and Wilma, there were at least ongoing, functional communications and relationships, says John R. Harrald, director of the Institute for Crisis, Disaster and Risk Management at The George Washington University. "So the question is, what do you do when state and local capacity fails for one reason or another, either because they're overwhelmed or they're incompetent? Do we have a system that allows us to scale up adequately, or do we need a system where we can bring in the military sooner, but not give away state and local control?"

Can We Talk?

Answering those questions will not be easy and will require rekindling a conversation about intergovernmental coordination and cooperation, the likes of which Washington hasn't seen in a long time. It's not clear whether the current cast of characters in the nation's capital is capable of that conversation. Congress and the Bush administration now seem much more comfortable dictating intergovernmental policy than discussing it. At the same time, states and localities haven't exactly been exceptionally responsible or reasonable in clamoring for federal emergency management and recovery assistance. Even longtime public policy analysts in Louisiana considered Louisiana's Republican Sen. David Vitter and Democratic Sen. Mary Landrieu's bipartisan grab for $250 billion in state and local assistance after Katrina to be a low point in the post-disaster intergovernmental proceedings.

More than just issues of emergency planning, response and recovery need discussing, says Paul Posner, an experienced GAO intergovernmental affairs analyst who is now director of the George Mason University master's program in public administration. "There's other knotty issues that cause a lot of intergovernmental friction, like federal insurance policies, local building codes and state land use policies."

There will be plenty to talk about now that the 2005 hurricane season has cooled off. But have the politics of intergovernmental emergency management and response cooled off enough to talk rationally?

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Frayed Connections

Jonathan Walters — Fri, 01 Mar 2002 00:00:00 -0500

America's federal, state and local governments must learn to get along if they are to provide real homeland security.

s chaos reigned in lower Manhattan on the morning of Sept. 11, an entirely different scene was unfolding more than 150 miles north in Albany, New York's capital. There, state officials were gathering in "the bunker," an emergency management nerve center beneath the New York State Police headquarters complex. As New York City emergency management officials scrambled to recover from the loss of their emergency response center-buried under the collapsed World Trade Center twin towers-the Albany bunker became the heart of an effort to focus the full resources of both the state government and the federal government to help city officials regroup.

Mark French, a volunteer firefighter from nearby Columbia County and an employee in the state's Office of Children and Family Services, pulled two shifts staffing the center. "It was impressive," he says. "You had officials from all the relevant state agencies sitting at desks around you so that if you needed something or had a question, all you had to do was ask."

The center's director, Ed Jacoby Jr., who had been rushed home from an emergency preparedness conference in Montana in an F-16, says the type of officials sitting at those desks were "people who can make decisions on the spot." So, while the New York Department of Environmental Conservation was setting up air testing stations around ground zero, the New York State Department of Transportation was working on an overall transit plan for the city in concert with city officials. The Department of Taxation lent its call center to handle the flood of phone inquiries and offers of assistance that began pouring in. The New York National Guard was mobilized for a wide variety of work and security details. Employees of the Federal Emergency Management Agency worked with state officials in the bunker to line up appropriate federal assistance.

It was the sort of cooperation and coordination that government bureaucracies aren't well known for the kind of effort that seems to be achieved only when inspired by the most horrific events. But the response in Albany was just one example of the kind of cooperation and coordination that all levels of government-federal, state and local-are going to have to make routine if the United States is going to be ready to prevent or respond to future attacks, say experts in terrorism preparedness.

That job is daunting. Trying to get a handle on all of the issues involved in homeland security is like chasing fog. First, there's the range of possible terrorist tools-biological agents, conventional explosives, chemical weapons and nuclear "dirty bombs," any of which might be delivered by enemies who are unafraid to die themselves in the process. Then there are the thousands of miles of border and the bustling ports and border crossings where terrorists can enter the country. Finally, there is the list of potential targets, including water supplies, power plants, hospitals, ballparks, airports, rail lines, power lines, dams, farms, factories, government buildings, civic monuments and soaring high rises, just for starters. "The U.S. is so large and so open that its vulnerabilities are almost incalculable," says Peter Beering, terrorism coordinator for the city of Indianapolis, who has made a career of making exactly such calculations. "The list of potential targets is literally the telephone directory."

Playing defense on the homeland security team, in other words, is a big, complicated and messy job-and one that isn't likely ever to be finished. Even the most advanced jurisdictions admit that they still have a lot to do and learn. But officials at all levels of government and across all kinds of agencies-from police and fire departments to public health, environmental and transportation agencies-agree that moving in the right direction is going to require local, state and federal officials to start working together more closely than they ever have in the past. "We're all one family now," says Jacoby. "We're all in this together."

But taken as a whole, the country's level of readiness is a patchwork quilt. Some states and localities seem to be relatively well-positioned to meet the anti-terror challenge. Others are just getting started. Underlying it all are continued problems with turf, responsibility, control and a basic tension between the imperative to centralize the nation's response system and the need to ensure flexibility in choosing the tools and tactics that are most appropriate for a given jurisdiction.

Positive Picture

A huge amount of sound and fury is emanating from all levels of government as insiders, outsiders and experts of every stripe weigh in on what ought to be done on the homeland security front, how quickly it needs to happen, who ought to have control over what and who should pay for it.

States and localities are adding anti-terrorism czars to their existing public safety systems and clamoring for billions more in federal money. Local officials insist they should get their cut of the federal pie directly, not through their state capitals. State officials counter that they're the natural organization point for the anti-terrorism response, and thus should be the conduit through which all federal assistance flows.

At the federal level, a gaggle of congressional committees is laying claim to pieces of the anti-terror turf. Lawmakers have introduced numerous bills dealing with law enforcement and funding for homeland security. Meanwhile, more than 40 agencies have petitioned Congress for special anti-terrorism funds, and a number of them have added homeland security offices to their already crowded organizational charts. Overseeing the federal effort is former Pennsylvania Gov. Tom Ridge's Office of Homeland Security, which faces the monumental challenge of putting all the pieces together.

In spite of the apparent chaos, upper-level staff in Ridge's office say they're optimistic about the nation's response and the chances of knitting together a coherent intragovernmental and intergovernmental anti-terror network. "The climate has changed," says Mark Holman, deputy assistant to the President for homeland security. "The American people and the President have an expectation that you can't have federal, state and local entities all operating independently."

Given the new imperative, says Holman, government agencies at all levels simply will have to start working together. He doesn't underestimate how difficult that will be for federal agencies. "I think things are more territorial at the federal level just by virtue of the size of the federal government," he says. "But we have a call to bring all agencies together." The Office of Homeland Security is considering putting together an intergovernmental advisory panel as part of its effort to craft both an immediate and a five-year homeland defense plan, Holman says.

For now, though, it's easy to look at the homeland security effort and see a very discouraging picture: Unlimited opportunity for terrorists. Governments at all levels running around doing their own thing. Food fights over funding. Jockeying for territory and position.

The real anti-terrorism picture, however, is more subtle, more complicated and, arguably, more positive. A number of states and cities have been working hard since the mid-1990s to build terrorism prevention and response capacities, in concert with officials from every level of government. In these places, there's a good working relationship between state and local officials and the regional federal operatives with whom they deal, whether in law enforcement, emergency response or public health.

Some of that work was inspired by federal legislation in 1996 that created competitive grants for cities to implement anti-terrorism plans. Under the Defense Against Weapons of Mass Destruction Act, sponsored by former Sens. Sam Nunn, D-Ga., and Richard Lugar, R-Ind., along with Sen. Pete Domenici, R-N.M., cities are eligible for grants to purchase equipment and conduct training exercises to combat terrorism. Initially, the Defense Department doled out the money, and it was restricted to the nation's largest 120 cities. The program has since been expanded, and in 1999 it was shifted to the Justice Department's Office of Domestic Preparedness. The grants pass through state governments, and only states that have developed strategic anti-terrorism plans that identify terrorist threats and targets and specify response plans are eligible.

That's why such a seemingly unlikely place such as Dane County, Wis., home to the state's capital, Madison, now has a substantial anti-terrorism plan in place. A central piece of Dane County's plan is a list of 187 potential terrorist targets, including a "top 20" set of targets most likely to be hit. The list was put together by a "domestic preparedness committee," made up of a host of county and city agencies, dozens of state agencies-including the highway patrol, emergency management and even family services-and federal representatives from the FBI, Defense, the Federal Emergency Management Agency, the Department of Health and Human Services and the Environmental Protection Agency.

Ray Pena, a population protection planner for the Dane County Emergency Management Department, says the group has been working steadily on readiness plans, doing drills and continuing to refine relationships and response protocols. Pena adds that the county also has reached out to adjoining cities and counties as a way to try to coordinate a regional response to any act of terrorism.

In Illinois, teams of first responders are now trained to handle both hazardous materials incidents and gunfights with terrorists. The idea for such teams came from a drill at the Illinois state fairgrounds that mimicked a biological attack launched by terrorists carrying guns. "Of course, what we found out was that the HAZMAT people weren't going in until law enforcement had dealt with the armed terrorists," says Matt Bettenhausen, the state's director of homeland security. "And law enforcement wouldn't go in because of the biohazard threat." Teams trained to deal with both issues now are placed strategically around the state, ready to respond at a moment's notice.

In Georgia, the state's head of homeland security has launched an effort to join forces with private firms to secure facilities ranging from ports to oil tank farms. Meanwhile, the state police have put together a special unit to check out trucks that carry hazardous materials-and the people who drive them.

All Disasters Are Local

State and local officials seem to have been thinking and working harder and more cooperatively on domestic preparedness than federal executives. "The federal government is just trying to catch up now," says Mel Dubnick, who follows intergovernmental affairs as a professor of political science and public administration at Rutgers University, Newark.

The advanced state of readiness at the state and local level shouldn't be a surprise, since these levels of government are closer to the problem when it comes to disasters, both man-made and natural. Yet many federal officials are still digesting that reality. "I think it hadn't really dawned on a lot of federal officials that state and local governments are really the primary players when it comes to both homeland terror prevention and response," says one high-level federal official. "It tests the federal view."

Just as it's no surprise that state and local governments have been paying more attention to homeland security than the feds, it's also not astonishing that those states and localities that are best-prepared to respond to terrorism are the ones with the most experience in dealing with disasters.

"We've developed a very robust system," says Dallas Jones, director of the Governor's Office of Emergency Services for disaster-prone California. Jones says that years of fires, earthquakes, riots and floods have driven the state to continually upgrade its intergovernmental emergency response capabilities and protocols.

In California, says Jones, state and local governments operate under a set of sweeping memoranda of understanding that commit agencies at all levels of government to answer when called. The agencies are connected to a state alert system so that calls can go out quickly and in a coordinated fashion.

In the event of a "World Trade Center-like event" in California, Jones says his office could immediately call in the state forestry department, for example, to set up a mobilization center. The department's employees are accustomed to building whole cities in the middle of the wilderness-they do it all the time when fighting major forest fires. And Jones' office could call the National Guard to handle the transportation of emergency response crews-they've had plenty of practice moving people in and out of disaster areas. In fact, New York called in officials from California to help with the distribution of donated supplies after the World Trade Center attacks precisely because of California's experience with disasters. The state also has developed a way to account for every agency's contribution to an alert, so that when it comes time to reimburse them, there's a maximum of documentation and a minimum of argument. Underlying California's system-and perhaps the key building block in developing a coherent intergovernmental terrorism prevention and response system-is the understanding that all disasters and emergencies are essentially local events, says Jones. Any system of terrorism prevention and response should start at the ground level, he argues, and build up. Local officials couldn't agree more. If something bad happens, "the feds aren't the ones who are going to be pulling bodies out of buildings," says Constance Perett, administrator of the Los Angeles County Office of Emergency Management, which works hand in glove with Jones' office through a regional coordinator.

Perett's world arguably is a microcosmic model of how the country should be thinking about terror prevention and response. Los Angeles County is sprawling, complex, multi-ethnic and multi-layered. Encompassing 400,000 square miles and including 88 cities, 137 named but unincorporated entities, 94 school districts and hundreds of special districts for everything from providing water to running sewer systems, it contains nearly one-third of California's total population of 35 million people. If L.A. County were a state, it would be the eighth most populous. It includes every conceivable terrorist target: oil pipelines, refineries, farms, ports, key rail lines, major freeways, sports facilities, water lines and military bases.

While the county always has been in the emergency management business, says Perett, it wasn't until 1996 that its board of supervisors gave her office specific orders to fight terrorism. Knowing that quite a bit of work had already been done by county law enforcement and fire officials, Perett pulled them into the circle, along with their counterparts at the federal, state and local levels. These officials joined representatives of local and state public health agencies, the National Guard, transportation organizations and dozens of other agencies and interests in forming an anti-terrorism working group.

Among the initiatives launched by the working group were training videos and exercises for the county's 49,000 first responders to disasters, as well as efforts to knit the county together into a more coherent collective of first-response agencies. It isn't perfect by any means, says Perett, but the county is now light years ahead of where it was back when terrorist attacks weren't on the regional radar screen.

The relationship between state and local government in California has led Perett to one important conclusion: The federal government should not send huge amounts of money to local governments absent a cohesive state terrorism prevention and response strategy. "Cities and counties are always concerned that the state is siphoning off the resources," says Perett. "But those same officials will be the first ones screaming when the state fails to provide direction and coordination during an incident."

California learned that lesson the hard way during a major fire in the hills of Oakland in 1991. "We lost a lot of homes and people died because of the chaotic response," says Perett. "Hose couplings didn't match from one fire company to the next. There was different terminology for equipment and tactics." The Oakland debacle led to state legislation requiring broad standardization of gear, tactics and terminology in firefighting forces statewide.

Since then, it has become axiomatic in California that state and local government work closely together when it comes to emergency preparedness and response. Communication protocols and equipment-both to alert agencies to an incident and to coordinate action during an incident-have been upgraded, with the state continuing to work with local jurisdictions to develop compatible systems.

Communication Conundrum

It's appropriate that so much time and attention has been paid to communication, say those who've made careers in emergency management. Communication has sifted out as the single overriding issue when it comes to preventing and responding to terrorist incidents. That includes communication among the potential players in overall anti-terrorism efforts and communication with the general public.

It is an issue that encompasses how well public officials communicate with each other as well as whether communication technology is suitable for use during disasters. How the country deals with the communication conundrum-at all levels-will ultimately dictate how successful the United States is in preparing for terrorism.

Much has been made of the need for law enforcement agencies at all levels to begin sharing information better. But the communication picture is much larger than that.

On the one hand there are the fundamental-and in many cases new-personal relationships that need to be forged at the local, regional, state and federal level. "The NFL's most successful quarterbacks don't meet their receivers for the first time in the huddle," says Indianapolis' Beering, who heads the city's anti-terrorist effort and is active in an ongoing forum on homeland security at Harvard's John F. Kennedy School of Government. Beyond the need for greater personal contact is the nitty-gritty issue of how to ensure coherent, reliable communication between high-level commanders and units in the field.

The issue of compatible communication technology must be resolved at a high level among local, state and federal officials before another attack takes place. Right now, the fact that local first responders use many different kinds of communication gear is a symptom of the lack of communication and cooperation among various layers and players at all levels of government.

Michigan, for example, is developing a statewide radio system that will operate on compatible channels so that all agencies involved in an incident can literally be on the same wavelength. "We're in the process of building an 800-megahertz backbone system for the whole state," says Col. Mike Robinson, who oversees the state's police, fire and emergency management operations. "Meanwhile you have the U.S. Department of Justice funding radio equipment at the county and city level that isn't compatible. There has to be better coordination."

Low Expectations

Robinson's comment is typical of state and local complaints about the federal government's role in homeland security. The criticisms can be divided into three categories: how the federal government responds and behaves during an event; how the feds interact with state and local government as a matter of routine; and how federal agencies conduct their affairs in Washington as partners in protecting U.S. citizens.

After the 1995 bombing of the Murrah Federal Building in Oklahoma City, Okla., federal officials charged in "as if there was no local incident command," says Ann Simank, an Oklahoma City Council member who has been active on the homeland security front with the National League of Cities. "Our first responders are well-trained and professional and after what they'd been through they didn't need that," Simank says. L.A. County's Perett reports a similar pushy approach by some feds during her county's readiness drills.

Federal hubris at ground zero-wherever that might be-is bad enough, say state and local officials. Much worse, they contend, is the attitude of federal agencies in Washington. For an earful on the subject, just ask any state or local director of emergency management or homeland security. "Cumbersome," "complex," "illogical" and "fragmented" are just some of the adjectives they use.

"It's very frustrating," says Illinois's Bettenhausen. "[The Justice Department] wants a strategic plan on homeland security and they make that process incredibly cumbersome and complicated. Now FEMA wants a plan and HHS wants one." At the same time, he says, the feds insist on tightly controlling what states can do with federal grant money. At times, the federal directives have no bearing on any state, local or actual emergency response need or technical reality.

Bettenhausen, who used to be an assistant U.S. attorney, says he doesn't have a problem with federal agencies asking for proof of a coherent state effort. Nor does he mind their taking an active role in developing national technical standards for equipment or response protocols. But what he'd like to see is a little coherence from the federal government-agencies working together so that states and cities don't have to deal with each one separately. And Bettenhausen and his colleagues would like to see many more federal partnerships with state and local government, especially if the feds are going to have a say in setting standards. Incidentally-or maybe not incidentally-Bettenhausen would like one other thing: the check for the $5.8 million that the Justice Department promised Illinois for fiscal 2000 and 2001 for the state's homeland defense efforts.

Bettenhausen's list of complaints leads ultimately to the door of the Office of Homeland Security, for which state and local officials seem to have almost universally high hopes and low expectations.

But what state and local officials don't want out of the Office of Homeland Security is a new federal Big Brother handing down orders from on high-something that Ridge and company seem to have no interest in doing. What state and local officials do want is a single federal point of coordinated contact. They also want Ridge to set up a standing intergovernmental committee to help hash out the federal response to homeland security and set some basic priorities for where and how resources should be used. Key members of Congress should also have a place at the table, adds Michigan Gov. John Engler, president of the National Association of Governors. That might be a way, says Engler, to show Congress that it must unify its own approach to homeland security, which he characterizes as "hopeless."

But when it comes to getting the federal government to coordinate the homeland security effort and to build new and strong partnerships with state and local governments, few officials outside Washington are very optimistic. Many such officials will apply the "B rule" to Ridge, Bettenhausen predicts: They'll "be here when you got here and be here when you leave."

Jonathan Walters is a freelancer writer in Ghent, N.Y., who frequently writes on intergovernmental issues. ]]>

The Power of Pay

Jonathan Walters — Fri, 01 Jan 1999 00:00:00 -0500

hen the ink dried on the collective bargaining agreement signed last August by Federal Aviation Administration and National Air Traffic Controllers Association officials, union members got the gold. They won a collective $200 million raise over three years, adding as much as $10,000 a year to the salaries of controllers in high-traffic centers. Supervisory staff, in good country-western-song style, got the shaft. Money for the raises would come in large part from reductions in supervisory ranks to decrease ratios of managers to front-line personnel from 1-to-7 to 1-to-10.

The negotiation was a remarkable first: A non-postal employee union bargained with management over wages. Federal managers, policy-makers and politicians have managed to keep pay off the negotiating table for the 40-year history of modern federal labor relations. The prohibition was symbolic of the general stranglehold management has held over labor at the federal level ever since President Kennedy first sanctioned collective bargaining for federal employees in 1962. That stranglehold was painfully obvious when members of NATCA's predecessor, the Professional Air Traffic Controllers Organization, were all fired after their nationwide strike in 1981.

NATCA's victory was twofold. Not only had the union bargained over money for the 14,300 air traffic controllers it represents, it had bargained over supervisory staffing levels. And in the opinion of Mark Gable, executive director of the Federal Managers Association, FAA had achieved the dubious distinction of having been fleeced to its skivvies by a union once considered to be the poster child for labor impotence. His succinct summary: "NATCA took the FAA to the cleaners."

It's a charge that NATCA insiders don't strenuously deny. After all, being accused of having picked management's pockets at collective bargaining time is the sort of criticism that unions can take all day, and for a simple reason: That's exactly what unions want their membership to hear.

When it comes to unionism--in the public and the private sector--membership is what it's all about. Federal unions have been fighting to hang onto members since the labor rosters peaked in the 1970s. Some of them are doing a fairly good job of it, but others continue to struggle. One key to building membership is the ability to deliver concrete benefits to workers, and there is no more concrete benefit than compensation. Healthy unions have found new ways to broaden the severely conscripted scope of bargaining, using every opportunity to pull the normally off-limits but absolutely critical issue of salaries into contract negotiations. Members like it.

NATCA is one of those unions that has succeeded in placing pay issues on the bargaining table. The National Treasury Employees Union is another. NTEU, which has steadily added dues-paying members since 1983, recently won a significant compensation coup for workers at the IRS. NTEU deftly parlayed last year's congressional IRS overhaul into an opportunity to bargain over pay, albeit indirectly. According to NTEU President Robert Tobias, the subject of how jobs are classified is now on the table. Job classifications determine job grades. Grades determine salary levels. In the past, unions could challenge agencies that downgraded employees' classifications, but they couldn't negotiate upgrades. At the IRS, NTEU has put classification upgrades on the table.

How NTEU won the right is a straightforward lesson in smart unionism. As part of the IRS reform bill, NTEU argued in favor of "certain personnel flexibilities," says Tobias. NTEU argued that a high-performance organization needs flexible personnel rules and so the IRS should be granted certain exemptions from Title V of the U.S. Code, the law that dictates personnel rules for the federal government. The union didn't go out of its way to explain that it also would win flexibility in what it could negotiate. While NTEU still can't bargain directly over dollars and cents, the next best thing is now on the table.

"It's a whole new arena, and we look forward to seeing if we can create some solutions to long-standing problems we've had around people being under-classified given their expertise," Tobias says.

NTEU's membership remains fairly healthy compared to its "big three" counterparts--the American Federation of Government Employees and the declining National Federation of Federal Employees--in part because of aggressive recruitment campaigns. Recent forays into the Food and Drug Administration and the Environmental Protection Agency netted NTEU 6,500 and 2,500 potential members, respectively. But what distinguishes NTEU from AFGE and NFFE is that it has aggressively and successfully fought for the right to bargain over wages and benefits for its members.

NTEU won the right to bargain over pay and benefits on behalf of its FDIC membership several years ago after it discovered that FDIC was exempt from Title V restrictions. Union officials quickly petitioned management to open up negotiations to compensation.

Not all unions have been so successful. That includes the largest federal union, AFGE, which nevertheless is certainly trying. In on-again-off-again negotiations with the Defense Department, AFGE has said it would accede to management's request for more flexibility in assigning pay grades to employees, but only if such assignment was subject to negotiation. AFGE National President Bobby L. Harnage says his union already has been burned once when it agreed to such a management-directed pay system for nurses at veterans hospitals. Management has used the flexibility to keep wages as low as possible, he says.

While trying to score wins for its membership through negotiations like those at DoD, AFGE is focusing on two other potentially membership-building strategies. First, it is trying to persuade non-dues-payers that to lobby the administration and Congress for higher wages, the union needs the clout of dues-paying members. Second, it is raiding NFFE's membership through what Harnage describes as friendly takeovers. Right now, AFGE has its sights set on NFFE members at the Veterans Administration. For the record, NFFE doesn't regard the incursion as even remotely friendly.

Dipping Memberships

Through all this activity, AFGE has managed to add about 14,000 members in the last five years, even in the face of government downsizing. But it's difficult to claim that the union is robust. The 183,000 dues-paying members on its rolls today are far short of the 255,000 that belonged in 1981. And when put in the context of the chronic problem facing all federal unions--no federal employee is compelled to join a union even when represented by one--AFGE's membership woes become clearer. AFGE has signed up only about 30 percent of the 600,000 federal employees it represents. The 417,000 free riders, as they're known in the business, enjoy free of charge all the perks of union membership, including union help over grievances and other non-wage benefits that unions can win for employees through collective bargaining.

The membership picture at the National Federation of Federal Employees is even bleaker: "The whole downsizing of the federal government has hit us hard," says Richard Brown, NFFE's new president. "I was in an Army installation that lost 2,500 people and it cost us 300 members right there. We're stable right now, but it's a fight because of layoffs."

At a time of downsizing, the imperative to sign up dues-paying members would seem even stronger. But the going is tough. "In most agencies you have relatively small actual membership in these unions because there's little to persuade reluctant employees to pay up," says Ned Lynch, a top staffer on the House Government Reform and Oversight subcommittee on civil service.

One thing, though, seems to work--the ability to bargain directly over pay and benefits. When a union has that, it has the attention of those it represents. They more readily make the link between membership, the strength of the union and the size of their paychecks at the close of collective bargaining. "If we had the ability to bargain over wages and benefits," NFFE's Brown says, "every person who's eligible to join our union probably would."

The larger postal worker unions, which won their exemption from federal personnel laws in the early 1970s, have paid membership rates that run upwards of 90 percent. Smaller unions, which for various reasons are also exempt from the ban on bargaining over wages and benefits (unions representing Tennessee Valley Authority employees, for example), also enjoy high rates of dues-paying membership. NATCA boasts a membership rate of about 75 percent.

The Partnership Pitch

Some federal union officials bend a little too far backward to deny that negotiating pay is a big deal. "If it's merely the delivery of a check, why would anyone join?" says NTEU's Tobias. "The issue is whether a union is helping people become part of the process of problem identification and figuring out solutions, and when something good happens in your workplace you can say, 'Wow, I'm part of this.' "

Some AFL-CIO officials have little patience for such a Pollyanna point of view, sincere or not. They say it's not merely delivery of a check that induces workers to join unions, it's the ability to bargain for a larger check every year. "The fact that wages and benefits are not negotiable is reflected in the relative inability of federal employee unions to gain substantial membership, and it's as simple as that," says one AFL-CIO official. And while Tobias asserts that bargaining over pay is no big deal, NTEU's push at the FDIC and IRS indicates the union is eager to do exactly that. And, at 67 percent, NTEU's membership rate is more than double AFGE's.

Besides, if collective input into the operation of the workplace is the most powerful inducement to joining a union, as Tobias asserts, then AFGE and NFFE should be sporting membership percentages as high as NTEU's. That is because the labor relations hallmark of the Clinton administration has been an emphasis on broadening the opportunity for worker involvement in resolving workplace issues. President Clinton's much heralded Executive Order 12871, signed in October 1993, included two initiatives that, on paper at least, expanded worker input into the day-to-day management of agencies' affairs and increased what would be considered negotiable at collective bargaining time.

The chief vehicle for the greater workplace cooperation is Vice President Al Gore's reinventing government spinoff, the National Partnership Council. Situated at the Office of Personnel Management, the council was set up as the quarterback for a governmentwide effort to encourage labor-management cooperation. The council extended the list of negotiable issues to include staffing levels, job assignments and content of jobs, which previously could only be put on, or taken off, the table at the discretion of management. All this extra involvement, according to Tobias' theory of what motivates union members to pay up, should mean healthy federal unions. But of the 1.1 million federal employees represented by unions, less than 40 percent actually pay dues.

The executive order just hasn't proved to be the transformational document that some union members had hoped it would. Success on the partnership front so far is anecdotal. In some places it seems to be helping government do a better job, while also improving labor relations. Tobias points to a reinvented relationship between labor and management at the Customs Service.

"We went from a labor-management relationship that was totally hostile and adversarial to a situation where real mission responsibilities are discussed and worked on and improved in partnership," Tobias says. One success, he says, is a drug interdiction system that was redesigned and re-energized with worker input, leading to a 41 percent increase in the amount of drugs captured in 1998, compared with 1997. AFGE, for its part, has published a booklet called "Government That Works: AFGE Labor-Management Partnerships Making the Difference" that chronicles partnership successes from Veterans Affairs Department offices in Detroit to Education Department offices in Atlanta. But both Tobias and Harnage acknowledge that life on the partnership front has been uneven.

However, the impact of the President's move to broaden the scope of collective bargaining is quite clear: It hasn't had any. Beleaguered career managers, who were all but ignored in the early phases of the National Performance Review, dug in and refused to comply with the order to expand the scope of bargaining. Unions complained to the Federal Labor Relations Authority--the chief arbiter of labor-management disputes. The FLRA concluded it had no power to enforce the order. The issue is now in court.

Back Door to Bargaining

If the ability to bargain over pay is a big part of what has made unions such as NATCA, postal organizations and NTEU so healthy, then why haven't AFGE, NFFE and even NTEU been more militant and direct in arguing for the same right? Virtually everywhere else, unions have the right to bargain over wages and benefits, including the federal unions' counterparts at the state and local government level. "If I were Bob Tobias, I'd want what NATCA got," says FMA's Mark Gable.

So far, though, there has been no broad-based frontal assault on either the Clinton administration or Congress for such an expansion of bargaining rights. Some union leaders have a harsh explanation for such passiveness. "It's a manifestation of an institutional problem whereby the traditional unions in the federal sector have learned not only to live with their idiotic non-bargaining relationship, but even love it," says a top federal union official.

Of course, it's more complicated than that. Union leaders doubt a frontal assault on a Republican-controlled Congress--or even the Clinton administration--would get them far. "We've always been intrigued with the notion of bargaining for pay," says a big three staff member. "We've been struggling with how to approach that. I don't think that calling for it directly is the smartest strategy. On the other hand, at some point we may just decide, 'What the heck,' and go for it."

To date, though, unions have decided to go the strategic route, waiting for the right opportunity to shoulder the door open once it has been cracked. Which is exactly what NATCA did last year. In fact, how NATCA won the right to bargain over wages isn't so much a story about a union taking the FAA to the cleaners as it is a story of the Clinton administration dropping the FAA off at the cleaners. All NATCA did was a little tough, smart bargaining once it got the FAA into the negotiation washing machine.

According to both union and management sources, the White House, after long-running discussions with labor over the expansion of bargaining rights, decided in 1995 to prove to union leaders that it really is friendly to the idea. It leaned on FAA Administrator Jane Garvey to include three lines in the agency's 1996 appropriation request that would largely exempt the FAA from Title V restrictions on bargaining over wages and benefits. A Republican Congress, which normally would reject such a provision out of hand, instead went along rather meekly. Lawmakers apparently were not interested in annoying a vocal and important constituency--air traffic controllers. Besides, only about 45,000 employees are affected (FAA employees are represented by four bargaining units in all).

NTEU seized a similar opportunity when it came time to reform the IRS and in effect got what the air traffic controllers got--new power to negotiate compensation by negotiating classification upgrades.

"You look at that piece of so-called reform legislation," says Lynch at the House subcommittee on civil service. "It was the same situation as with the FAA; it's the employee union that takes most advantage. . . . They ride into the hearings with a reform agenda that effectively ends with 'How do we get our share out of this?' " The strategy may rub certain Republican subcommittee staffers the wrong way, but it sure works for unions.

Besides, critics say, it's more than a little strange that federal unions have been prohibited from bargaining over money in the first place. At the state and local level, next year's raise and what sorts of benefits will come with it aren't just boilerplate discussion, they are mandatory bargaining points. Even in a right-to-work state such as Texas, where state and local unions are prohibited from collective bargaining, teachers unions will sit with management for discussions that are euphemistically labeled "meet and confer." They talk about issues such as what management will budget for teachers' salaries in the upcoming year. When it comes to negotiating over wages and benefits, state and local unions don't always get what they want. But they are at least involved in the discussion.

Asked about the arrangement at the federal level, the response of local government union leaders isn't surprising. "It's archaic and it's crippling to unions not to be able to bargain over wages and benefits," says Steve Fantauzzo, head of the American Federation of State, County and Municipal Employees local that represents employees in Indianapolis.

Certainly, workplace issues are important. Fantauzzo points out that AFSCME recently organized the custodial staff at the U.S. Capitol because janitors perceived working conditions to be supremely lousy, not because the union promised to get them big raises. "Where you have a union that is aggressive in protecting the rights of a fairly homogeneous group, like air traffic controllers or Treasury employees, you will usually find higher levels of membership," Fantauzzo says. In the cases of NATCA and NTEU a collective beleagueredness--for NATCA members it's working conditions; for NTEU members, national outrage over IRS practices--among those whom the unions represent has likely spurred members to sign up.

But the evidence is clear: Unions that one way or another win the right to bargain for pay have a much brighter future than those that don't. And if supervisory staffing levels happen to wind up on the table as well, that's fine, too. "It's a self-reinforcing cycle," Harnage says. "The more effective you show your membership that you are, the more they'll want to join. The more that join, the more effective the union becomes."

It's a straightforward formula for federal unions that will make the difference between being vulnerable to the vagaries of Washington politics--downsizing and all--and becoming a consistent force to be reckoned with.

Jonathan Walters is a senior staff writer at Governing magazine and author of Governing's Guide to Performance Measurement for Geniuses (and Other Public Managers), 1998.

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Count Your Costs

Jonathan Walters — Thu, 01 May 1997 00:00:00 -0400

ver the last few years the General Services Administration has been squeezed hard-the agency's budget and staff have each shrunk by almost 30 percent since 1993. In the face of that kind of pressure, top managers had a pretty logical epiphany: They realized they had better start coming up with some new and creative ways to do what they do more efficiently.

In seeking to do that, though, GSA discovered it didn't actually know what it cost to provide any of its services on a transaction-by-transaction basis.

Yes, GSA could gin up general figures about its annual budget and expenditures. It could produce reams of data on what it accomplished in any given year. What it couldn't illustrate in any meaningful detail was what it cost to do very specific things like lease space or buy property. The agency didn't know, in other words, whether it was-or could be-competitive with the private sector real estate office down the block; or whether it was providing real value to its immediate customer: the rest of the federal government.

But even if GSA guessed-or roughly calculated-that it could be more efficient and competitive, the agency still had a problem: It could not break down the specific expenses that contributed to the overall cost of doing something like finding and renting office space for another agency. How much of the cost was for personnel? How much was administrative overhead? How much could be apportioned to travel or office equipment? How much was just redundant paper pushing? Without specific information, any effort to become more efficient would be flying blind. And without such information, GSA was hard-pressed to argue that it could become competitive.

So GSA decided to join the handful of federal agencies who are pioneering a new style of federal accounting. The agency signed on to pilot several experiments in what is known as activity-based costing, or ABC.

ABC is the practice of focusing on some unit of output-whether it's printing a dollar bill or maintaining peace in the Middle East-and then trying to figure out to as precisely as possible what contributes to the cost of that output, from manhours, to materials and equipment, to administrative overhead and beyond. With such a breakdown in hand, the theory of ABC goes, managers can hone in on key cost drivers that are ripe for reduction.

While it sounds simple, ABC can be a very complicated proposition, requiring a whole new approach to how managers and accountants view and evaluate what an organization does and how it does it. With its roots in private-sector manufacturing, ABC is clearly adaptable to a wide variety of governmental production processes. If the output is relatively straightforward-like printing a dollar bill-then the process of allocating costs to that output may also be relatively straightforward. But given the myriad and frequently complex tasks in which the federal government is engaged, implementing ABC usually takes a lot of work, some best-guess creativity and, at least in the beginning, a leap of faith.

Those who've tried it, though, have found it can be an illuminating exercise, offering managers the equivalent of sandpaper and a jigsaw in making changes in process and organization, when all that was available in the past was a sledge hammer and a hand saw.

"It is a way to understand the true cost of operating," says C. Morgan Kinghorn, who helped introduce ABC at the IRS several years ago as the agency's chief financial officer; he now works for Coopers & Lybrand selling ABC to other branches of the federal government. "It allows you to break out the real cost components of the products or services you deliver."

Beyond the Dancing Tax Dollar

That is a far cry from most accounting systems today in the federal government. Those systems are great at tracking big numbers-like how much money was received, how much disbursed and in what broad categories-but they offer only the roughest idea of the real cost of doing certain types of business.

What departments or programs know about cost these days is blunt stuff: how much money is coming in; what their personnel costs are; and what they spend on rent, utilities, equipment and materials. But when it comes to explaining what portion of each of those goes into producing a single unit of work-processing a social security check or protecting an endangered species, for example-they are pretty much at a loss. It is virtually impossible, argue ABC proponents, for managers to divine where or how processes might be made more efficient without knowing in detail what's really driving the cost of doing specific things.

To succeed at activity-based costing, government has to do more than simply follow the dancing tax dollar, which it does well now. Government has to identify discrete outputs and then take labor costs (including fringe benefits), rent, equipment, materials, administrative overhead (including supervisors' salaries) and so forth, and apportion them to those outputs. It is no surprise that the task is widely viewed as arbitrary, capricious and daunting.

Yet as hard-or arbitrary-as it might seem, a science of activity-based costing is emerging. "Most of the information you need to do this exists in government records right now," contends Ellen Doree Rosen, who came up with an equation for doing ABC while a professor of public administration at the John Jay College of Criminal Justice in New York.

Under Rosen's formula, such factors as the cost of labor, equipment, rent, energy, supervisory salaries and other overhead are accounted for. They are added together to arrive at an overall number that is then divided by units of the activity (outputs). The activity can be anything-processing a tax return, handling a labor grievance or accomplishing an F-111 bombing run.

Rosen has even taken her formula a step further. Obviously, calculating the cost of processing a tax return is just one dimension of a two-dimensional exercise. The other dimension is quality-asking, for example, if the form was processed quickly and accurately. Rosen offers a variety of ways to gauge quality in the overall ABC equation. The resulting number is an indicator of both efficiency and effectiveness.

A lot of basic work has been done on implementing ABC in government. Consultants like Kinghorn are considered old hands at it. And some off-the-shelf computer programs can be adapted to the tactic.

But that doesn't mean ABC is easy, or that everybody in government should try it. "It's not the answer to everything," says Doris Chew, acting executive director of the Joint Financial Management Improvement Program.

But for those who have decided ABC is the best answer right now for calculating the costs of doing business, most contend that the work involved in applying it is worth it. "It was eye-opening in a lot of areas," says Dave Rebich, who heads up the ABC effort at the Treasury Department's Financial Management Service.

As FMS began to look at some contributors to the cost of its outputs and products, he says there were some big surprises. "Just looking at what it cost to do time cards amazed us; it is a lot of money. Realistically we can't do away with our current time card system immediately, but we can certainly look at other systems for handling them, and calculate whether or not they'll save us money down the road."

Missions and Costs

The ability to do detailed analyses-such as what the cost of handling and processing time cards contributes to the overall cost of a product-is the purest and least common reason more federal managers these days are learning about ABC.

The more common reason managers get into ABC is that they have to. With passage of the 1990 Chief Financial Officers Act and the 1996 Federal Financial Management Improvement Act, agencies have to begin calculating-and where appropriate, recovering-the real cost of services provided to customers inside or outside government.

The Immigration and Naturalization Service, for example, is using ABC to recalculate its fees for everything from administering citizenship exams to issuing green cards. In all, the agency has identified more than three dozen product lines for immigrants and prospective U.S. citizens which need updated fees. Some cost drivers identified by INS include the cost of an FBI fingerprint check and what courts charge per head for swearing in new citizens.

The huge amount of work INS is putting into investigating real costs is paying off in one other way besides fees that more accurately reflect the true cost of service, says Mike Natchuras, who directs the agency's ABC effort. INS can now estimate with much more confidence what fees it should charge for new services by using its cost breakdowns for similar or related services.

While INS might sound like it's ahead of the game, Congress views the agency as a laggard. Agencies should have had congressionally approved cost accounting systems in place last September. That deadline may not have been realistic, but it had value, says Monica Congleton, a cost accountant at the Veterans Affairs Department and co-chair of the implementation subgroup of the Governmentwide Cost Accounting Work Group, a network of government accountants, managers and CFOs working to carry out the congressional mandate. "If it weren't mandated I don't think it would be happening. I'd be hard-pressed to think of anybody who initiated ABC a long time ago."

Several executive branch organizations are helping push the cost accounting effort. The Joint Financial Management Improvement Program, supported jointly by Treasury, OMB and the General Accounting Office, is developing training materials for officials interested in implementing ABC, as well as other cost accounting systems. In June 1995, the Federal Accounting Standards Advisory Board released a statement entitled "Managerial Cost Accounting Concepts and Standards for the Federal Government."

Another major piece of legislation is indirectly driving ABC: the 1993 Government Performance and Results Act. As most federal managers are now probably painfully aware, GPRA requires agencies to identify core missions and develop performance measures that will allow them to gauge progress on those missions.

While that is a laudable goal, it is only half the performance equation, argue ABC proponents. The other half is to calculate whether resources are being maximized in achieving the outcomes. Even the most sloppily run department or bureau can achieve great things given unlimited resources. The key-especially in times of dwindling resources-is to perform efficiently. And that is where the analytical power of ABC comes in, argue proponents.

"I've come up with a golf analogy," says OMB controller G. Edward Deseve. "Identifying your overall mission is like driving. Then as you refine the whole process you work your way through your irons until you get down to putting. ABC is putting."

Other factors driving the incipient push to do ABC include the General Accounting Office's list of federal programs at high risk of financial impropriety, spurring those on it to investigate how to more solidly connect budgets and achievements, says Al Hyde, an expert in federal budgeting and a senior staff member at the Brooking Institution's Center for Public Policy Education.

Hard Sell

Despite the growing number of cases illustrating the potential of ABC, it is still a hard sell in government (state and local governments have only just begun to embrace the practice, and only in what are considered management bellwethers like Phoenix and Indianapolis). The usual suspects-bureaucratic inertia, turf protection, fear that the numbers will be used to justify cuts, and plain laziness-are all fingered as chief culprits. But another big problem is that many in government view ABC as a neurotic reemergence of such management trends as planning-programming budgeting systems, management by objectives, total quality management, or any of a host of other "flavor of the month" management trends that have swept over the federal government with frequently unhappy effects.

It makes sense that organizations trying ABC are, like GSA, frequently doing it for enlightened self-interest as much as to satisfy any directive.

The key to successfully implementing ABC in any organization is not magic, says Howard Katz, the point man for ABC at GSA. It takes at least a modicum of support from an organization's chief financial officer, and GSA's CFO, Dennis Fischer, happens to be an enthusiastic supporter. But once a core of top program and budget officials committed themselves to investigating the practice at GSA, it boiled down to plain old hard work. It was a matter of educating those who would be asked to implement ABC, says Katz, and then asking for volunteers. The initial effort involved launching a training program which included a two-day workshop on activity-based costing for 1,000 mid-level managers and half-day workshops for members of the Senior Executive Service. "Our approach," says Katz, "was not to try to sell it to anybody, but to work with people who after learning about it wanted to try it."

GSA's Property Acquisition and Realty Service (PARS) business line-GSA's real estate arm-stepped forward first. The organization's interest was inspired in no small part because it was the section of GSA most under the privatization gun.

While PARS is just beginning a full cost accounting of its various products and services, it has already identified ways to do its job cheaper, faster and smarter. For example, GSA develops space requirements with clients jointly. Yet it still sends the final request back to its customer agency for final approval. "During the whole process of analyzing costs, we realized that didn't make any sense, since we'd worked all that out jointly already," says Julie Wilson, who is handling the ABC pilot for PARS.

The larger question of whether ABC is just another flash-in-the-pan management trend won't be answered for years. Generally, those who've tried it, like it. But already there are cautionary tales to tell. The pioneering ABC effort at the IRS of a few years ago is being buried in the debris of a string of management disasters, in particular the debacle surrounding its multibillion-dollar computer overhaul, along with the resignations of some key ABC advocates.

Interest in ABC is increasing. Much of what the federal government does lends itself to activity-based costing. One day the federal government may even identify all the costs associated with maintaining world peace-from travel to pensions and postage.

What you don't know about your costs can put you at clear risk; what you do know may be the key to your survival.

Jonathan Walters is a senior staff writer for Governing magazine. He has covered state and local public policy for the last 15 years. He is working on a book on performance measurement in state, local and federal government.

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Anatomy of ABC

Jonathan Walters — Thu, 01 May 1997 00:00:00 -0400

ecently the Veterans Affairs Department's Veterans Benefits Administration began calculating the cost of activities related to key outputs (called product lines), including the cost of processing death awards at the adminsitration's Philadelphia Regional Office and Insurance Center.

In fiscal 1996, the office processed 134,285 death awards at a total administrative cost of $7,416,640, or $55.23 per transaction. The value of all death benefit payments awarded is in the billions of dollars.

According to Richard Norwood, the agency's project manager for activity based costing, the detailed breakdown of costs per transaction will allow managers at the Philadelphia center to much more accurately monitor and analyze major fluctuations in the cost per unit of delivering death benefits from year to year.

The Output: 134,285 Death Benefit Claims

The cost of that output broken down by activities for fiscal 1996:

Receive and process incoming mail	$486,793
Research case files	$426,693
Additional research for more complex cases	$78,993
Processing and mailing the death award check	$4,031,204
Verify that checks were sent out	$427,642
Spot-check the award and verification process	$245,906
Customized (non-automated) claims disbursements	$143,228
General follow up on file and paperwork	$234,479
Update or retire files	$274,766
Information technology systems cost	$1,066,936
Total	$7,416,640
Total transactions	134,285
Cost per transaction	$55.23

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Count Your Costs

Jonathan Walters — Thu, 01 May 1997 00:00:00 -0400

In seeking to do that, though, GSA discovered it didn't actually know what it cost to provide any of its services on a transaction-by-transaction basis.

Beyond the Dancing Tax Dollar

A lot of basic work has been done on implementing ABC in government. Consultants like Kinghorn are considered old hands at it. And some off-the-shelf computer programs can be adapted to the tactic.

Missions and Costs

Hard Sell

It makes sense that organizations trying ABC are, like GSA, frequently doing it for enlightened self-interest as much as to satisfy any directive.

What you don't know about your costs can put you at clear risk; what you do know may be the key to your survival.

Resources

The Governmentwide Cost Accounting Work Group is a network of federal government managers working to implement various cost accounting practices, including ABC, governmentwide.

This spring the group will publishing the "Managerial Cost Accounting Implementation Guide." For more information, contact Joe Henle at the Veterans Affairs Department at (202) 273-5520. Appendices to the guide are available on the work group's Web site at www.financenet.gov.

To order copies of the Federal Accounting Standards Advisory Board's Statement of Recommended Accounting Standards No. 4, entitled "Managerial Cost Accounting Concepts and Standards for the Federal Government," contact the board at (202)512-7350.

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