new jersey initiative · 2010. 9. 24. · Summary of THE NEW JERSEY INITIATIVE: Building Management Capacity ... Melissa Mink..... Human Resources Management Research Assistant Alyssa

Summary of

THE NEW JERSEY INITIATIVE:Building Management Capacity

in New Jersey Municipalities

Maxwell School of Citizenship and Public AffairsSyracuse University, New York

Eagleton Institute of PoliticsRutgers, The State University of New Jersey

Funded byThe Pew Charitable Trusts

and

State of New Jersey Department of Community Affairs

2002

© 2002 by The Maxwell School of Citizenship and Public Affairs at Syracuse University and The Eagleton Institute of Politics, Rutgers, The State University of New Jersey.

All rights reserved including the right of reproduction in whole or in part in any form.

ISBN 0-9723595-1-6

New Jersey Initiative Project Staff

The Maxwell School of Citizenship and Public Affairs, Syracuse University

Dale Jones.............................. Director, Managing for Results Faculty ExpertDana Michael Harsell........... Project Manager, Managing for Results

Research AssociateStuart Bretschneider.............. Information Technology Management Faculty

Expert Sally Coleman Selden........... Human Resources Management Faculty ExpertYilin Hou............................... Financial Management Faculty ExpertConnie Bawcum.................... Capital Management Project ConsultantMax Bohnstedt..................... Capital Management Project ConsultantSuzette Denslow.................... Capital Management Project ConsultantCarol Ebdon.......................... Capital Management Project ConsultantAmy K. Donahue................... Public Management ConsultantBethany Walawender............ Project Finance and AdministrationKelley Coleman..................... Office Coordinator Willow Jacobson................... Human Resources Management Research

AssociateOra-orn Poocharoen............. Managing for Results Research Associate Yonghong Wu....................... Financial Management Research AssociateJessica Crawford.................... Public Relations Coordinator, Human Resources

Management Senior Research AssistantTiffany Tanner...................... Publication Coordinator, Financial Management

Senior Research Assistant Figen Gungor........................ Project Senior Research Assistant Chris Folts............................. Project Management Research AssistantSharif Nankoe....................... Project Management Research AssistantPaula Acosta.......................... Financial Management Research AssistantKingsley Chukwu.................. Human Resources Management Research

AssistantMelissa Mink......................... Human Resources Management Research

AssistantAlyssa Colonna...................... EditorKari Parsons........................... Project ConsultantChris Bronk............................ Web Site Designer Dana Cooke........................... Logo Design

Eagleton Institute of Politics Rutgers, The State University of New Jersey

Ingrid W. Reed...................... Associate Director, New Jersey Government Advisor

Jon Erickson.......................... Project Manager, Financial Management Advisor Joanne Pfeiffer....................... Office CoordinatorGenikwa Williams................. Project Research AssistantLucy Baruch........................... Project Finance and AdministrationAudrey M. Kelly..................... Editor, Summary Report

New Jersey Initiative Advisory Committee

Loretta Buckelew................... Assistant to the Deputy Director, Division of Local Government Services, State of New Jersey

Henry A. Coleman................ Director, Center for Government Services, Rutgers, The State University of New Jersey

Jon Erickson........................... Director, Master of Public Administration Program, Kean University

Michele Tuck-Ponder............ President, Ponder Solutions William A. Watson................ Executive Director, John S. Watson Institute for

Public Policy, Thomas Edison State CollegeJohn Weingart....................... Associate Director, Eagleton Institute of Politics

Rutgers, The State University of New Jersey

The researchers, government agencies and educational institutions who partici-pated in the NJI express their sincere gratitude to the seven municipalities whograciously gave of their time, knowledge and resources to participate in the proj-ect.

The municipalities are:Brick Township, Ocean CountyCity of Elizabeth, Union CountyIrvington Township, Essex CountyFranklin Township, Somerset CountyOld Bridge Township, Middlesex CountyCity of Paterson, Passaic CountyCity of Trenton, Mercer County

Address inquiries to:The Alan K. Campbell Public Affairs InstituteThe Maxwell School of Syracuse University306 Eggers Hall, Syracuse, NY 13244 315/443-9707 Fax: 315/443-9734

The Eagleton Institute of PoliticsRutgers, The State University of New Jersey191 Ryders Lane, New Brunswick, NJ 08901 732/932-9384 Fax: 732/932-6778

Table of Contents

Introduction..................................................................................................................5

Executive Summary (Reprinted from the NJI Report).......................................................6

Summary of NJI Report Chapter 1:Assessing Management Capacity in New Jersey Municipalities...................................9

Summary of NJI Report Chapter 2:Financial Management................................................................................................12

Summary of NJI Report Chapter 3:Capital Management...................................................................................................17

Summary of NJI Report Chapter 4:Human Resources Management.................................................................................22

Summary of NJI Report Chapter 5:Information Technology Management.......................................................................27

Summary of NJI Report Chapter 6:Managing for Results...................................................................................................32

Conclusion: Improving Management Capacity In New Jersey Municipalities (Reprinted from the NJI Report)......................................................................................37

Summary of THE NEW JERSEY INITIATIVE4

Introduction

THIS BOOKLET IS A SUMMARY OF THE NEW JERSEY INITIATIVE (NJI), a yearlongresearch effort conducted jointly by the Alan K. Campbell Public Affairs Institute of theMaxwell School of Citizenship and Public Affairs at Syracuse University and the EagletonInstitute of Politics at Rutgers, The State University of New Jersey.

The New Jersey Initiative is an extension of the groundbreaking work of theGovernment Performance Project (GPP), which focuses on large city and county govern-ments and state governments. Using the GPP model, the New Jersey Initiative generatesanalyses of five important management systems, but does so at the smaller, municipal-level of government. The five systems are: financial management, capital management,human resources management, information technology management, and managing forresults.

The research also examines the relationship between local governments and the stateof New Jersey, whose administrative, legislative, and regulatory authority plays a key rolein development of effective management systems at the municipal level. The NJI Report’sconclusions and recommendations are designed to help provide insight on how these lev-els of government interact and to foster discussion on how the relationship might beimproved.

During 2001 and 2002, researchers worked closely with seven New Jersey municipali-ties that were the focus of the study: Brick Township, Elizabeth City, Franklin Township,Irvington Township, Old Bridge Township, Paterson City, and Trenton City. These com-munities were invited to participate in the research project based on a variety of factorsthat made them reflective of the diversity and complexity of New Jersey’s municipalities.Research teams obtained data from the municipalities through surveys and question-naires, public documents, and interviews of professional managers.

The Summary of the New Jersey Initiative Report is designed to help interested partiesnavigate the full NJI Report. The Summary excerpts the Executive Summary and theConclusions Chapter of the NJI Report and reprints them in full. Additionally, each chap-ter of the Summary report is organized to provide the following:

• An introduction to the management system under review• The criteria used for assessing each management system• A summary of the results of the research• The recommendations for each management system excerpted from the NJI

Report and reprinted in full.Finally, all research referenced in the Summary of the New Jersey Initiative Report is docu-

mented in the Bibliography of the full NJI Report.

Introduction 5

Executive Summary(Editor’s Note: This chapter is reprinted in full from the NJI Report)

GOVERNMENTS AT ALL LEVELS IN THE UNITED STATES are engaged in long-term effortsto improve performance and provision of services. Citizens, elected officials, the media,and government leaders and managers expect excellence from government and supportreform efforts to achieve it. Indeed, government reinvention and reengineering activitieswere commonplace in the 1990s for federal, state, and local levels of government. Theoverarching goal in most government reform efforts then and now is to enhance govern-ment performance.

The New Jersey Initiative is an innovative research effort in the state of New Jerseyinvolving seven municipalities invited to participate in a pilot project that examinesmunicipal management. The study was conducted by Syracuse University’s MaxwellSchool of Citizenship and Public Affairs and Rutgers University’s Eagleton Institute ofPolitics during 2001 and 2002 with funding from The Pew Charitable Trusts and the Stateof New Jersey Department of Community Affairs. The municipalities that participated inthe project are Brick Township, Elizabeth City, Franklin Township, Irvington Township,Old Bridge Township, Paterson City, and Trenton City.

The purpose of the New Jersey Initiative is to increase understanding of the capacity ofmanagement systems that best enable municipal governments to perform well and meetthe needs of citizens. Based on the premise that more extensive management capacity pre-cedes better management performance, the New Jersey Initiative assessed managementcapacity in the following five areas that are critical to delivering improved services at lowercosts and achieving high performance in government:

• Financial management• Capital management• Human resources management• Information technology management• Managing for resultsThe 1993 National Commission on the State and Local Public Service stated, “Yet a

growing consensus has emerged among both citizens and public officials that state andlocal governments need to improve their capacity and performance if we are to meet thechallenges of our rapidly changing economic and social systems.” Thus, the New JerseyInitiative is an important effort to identify how New Jersey municipalities can improvetheir management capacity to result in better performing government and delivery ofservices to their citizens.

The five management areas represent elaborate systems for each municipality.Furthermore, the complex environment in which they operate creates management chal-lenges. Today, municipal managers in New Jersey contend with pressures associated withkeeping taxes under control; managing fiscal affairs tightly; maintaining physical infra-structures; hiring, training, and retaining personnel; investing in information technology;and planning for the future. At the same time, they are complying with rules and regula-tions; responding to security and safety issues related to the aftermath of 9-11 terrorist

6 Summary of THE NEW JERSEY INITIATIVE

attacks; dealing with citizen inputs and complaints; working in a political environment;and responding to state policies and requirements. This report shines a light on thosecomplexities. Given the nature of the challenges and constraints these municipalitiesface, researchers noted impressive strengths in their governance activities.

It is important to clarify that this study is about municipal management, not munici-pal politics. We acknowledge the significance of political factors and recognize they mustbe considered, but they were not the focus of this study. It is true that municipal manage-ment in New Jersey is often affected by politics, as is the case for all government entities.Nevertheless, the New Jersey Initiative was chartered specifically to evaluate the manage-ment capacity of municipalities.

Researchers found both strengths and weaknesses in each of the management areas.Comprehensive criteria-based analyses of financial management, capital management,human resources management, information technology management, and managing forresults are contained in separate chapters of the report. Throughout the process of con-ducting the study, researchers all too often witnessed an on-going tension driven by statefinancial management and civil service legal requirements. To some extent, an “us versusthem” condition exists which does not always give rise to good governance. This may bepartly a reflection of the state’s higher level of oversight of those municipalities in theDistressed Cities Program. Another contributing factor may be that the higher performingmunicipalities feel frustrated by the “one size fits all” oversight approach. Therefore, thereport’s chapters include recommendations for each of the management areas, for thestate as well as the municipalities, aimed at improving management capacity in munici-palities.

Overall, improving management capacity in the seven municipalities in the study,along with other New Jersey municipalities with similar characteristics and conditions,requires a stronger collaborative approach from municipalities and the state, recognitionof vital reforms, and bold actions. A major conclusion of the study is that success inimproving management capacity will depend on mutually reinforcing actions and greatercooperation by both municipalities and the state.

The New Jersey Initiative concludes that municipalities can increase managementcapacity in two important ways. First, they can take advantage of any existing leeway,such as that made possible by the New Jersey Optional Municipal Charter Law, known asthe Faulkner Act, to grant business administrators broad powers and authority to operateand manage municipal affairs. Second, municipal leaders can create an environment thatrecognizes the value of and rewards management initiative, innovative actions, imple-mentation of best practices from other locales, and prudent risk-taking.

For the state level, the project also recommends new approaches to bring improve-ment to municipal management capacity. First, if the state modifies its oversight relation-ship with municipalities, it may experience positive results. The current approach empha-sizes imposing the state’s view of appropriate performance and regulating to preventwrongful behavior by municipal officials. Although firm state oversight is well intendedand does prevent unwanted behavior, it comes with the price of frustrating local govern-ment managers. For those municipalities where good performance warrants it, shifting toan approach that gives greater prominence to independent capacity building and trust

Executive Summary 7

might lead to higher performing government. Second, the state should work closely withmunicipalities to find ways to provide regulatory relief where appropriate, generate flexi-bility for management decision-making, and furnish management tools to local govern-ments.

The New Jersey Initiative Report concludes that vital reforms are necessary in four keyareas and recommends bold actions necessary to address each one:

Professional managers for the state of New Jersey and its 566 municipalities are con-sidered to be highly qualified. They have a reputation for managing programs well andsuccessfully serving the citizenry despite many challenges. The New Jersey Initiativefocuses on how municipalities and the state can reach a higher level of performance byimproving management capacity in municipalities. The report presents its findings in aconstructive manner. The New Jersey Initiative observes that if the state and its municipal-ities work together and make the recommended changes, they will build municipal man-agement capacity and strengthen excellence in governance for New Jersey.


Vital Reform Area #1: State regulatory and proce-dural restraints impede local government manage-ment innovation.

Bold Action #1: The state should reduce burden-some and costly restrictions on municipal manage-ment activities where appropriate; allow more flexibil-ity and discretion for municipal managers; enhancestate mechanisms for providing technical, financial,and other kinds of assistance to municipalities; andcreate incentives for entrepreneurial managementbehavior by municipal managers.

Vital Reform Area #2: In its regulatory manage-ment oversight role, the state does not sufficientlydifferentiate among municipalities in terms oftheir characteristics and performance.

Bold Action #2: The state should further itsefforts to classify municipalities in multiple cate-gories, apply different strategies to assist the vari-ous categories, and customize regulatory treat-ment to fit the specific needs and circumstancesof different municipalities.

Vital Reform Area #3: Municipalities lack formal-ized, centralized, and long-term managementplanning activities.

Bold Action #3: Municipal councils and mayorsshould delegate greater authority to businessadministrators so they can bolster strategic plan-ning; strengthen their management systems; for-malize and centralize management oversightactivities; and where it is best to do so, integratemanagement systems across departments.

Vital Reform Area #4: Municipalities do not suffi-ciently exercise the management prerogatives thatare available to them.

Bold Action #4: Municipalities should be moreinnovative in applying management practices,take reasonable risks when implementing newmanagement practices, and ask for guidance andassistance when needed from the state.

VITAL REFORMS AND BOLD ACTIONS

Summary of Chapter

1Assessing Management Capacity in New Jersey

Municipalities

THE FIRST CHAPTER OF THE NEW JERSEY INITIATIVE (NJI) REPORT introduces the proj-ect, its origins and its goals. Then, management capacity is defined, and its relevance topublic officials, citizen stakeholders, and to overall government performance is explained.

The chapter reviews the five management systems researched in the New JerseyInitiative and the role they play in determining management capacity. It also expands onthe purpose and benefits of the New Jersey Initiative.

Finally, the chapter looks at the laws—and the “unique features”—governing NewJersey municipalities and provides an overview of the seven communities that participat-ed in the New Jersey Initiative.

Project Origins and Management Capacity

The New Jersey Initiative was inspired by the Government Performance Project (GPP), anationally recognized, comprehensive examination of core government managementactivities and their effectiveness.

The GPP, administered by the Maxwell School of Citizenship and Public Affairs atSyracuse University, analyzes the management capacity of all states and of selected largecity and county governments across the United States. It assesses not only the effective-ness of management systems in five key areas, but also how well those management sys-tems are integrated. Results are published annually in Governing magazine.

The NJI Report states that management capacity is best defined as “government’sintrinsic ability to marshal, develop, direct, and control its human, physical, and informa-tion capital to support the discharge of its policy directions. That is, management capacityconcerns the extent to which a government has the right resources in the right place atthe right time.”

The model shown in Figure 1.1 is key to understanding the structure of the NJIresearch. It appears in Chapter 1 of the NJI Report and illustrates the relationship amongpublic resources, government management performance, and overall policy performance.

The model shows how government’s performance depends on management capacity,and in turn, how management capacity is underpinned by four distinct but interrelatedcomponent systems: financial management, capital management, human resources man-agement, and information technology management. These systems can be integrated inan overall orientation towards achieving results. Thus, management quality is linked tothe overall performance of government.

Efforts to understand a particular government’s management capacity focus on three

Assessing Management Capacities in New Jersey Municipalities 9

targets for analysis: the management systems; the extent of integration—which is accom-plished through leadership, the use of information and the allocation of resources; and,the degree to which a focus on results exists.

New Jersey Initiative Purpose and Benefits

The New Jersey Initiative states its purpose as increasing—at both the state and municipallevel—understanding of the capacity of management systems that best enable municipalgovernments to perform well and meet the needs of citizens.

The NJI analyzes the same five management systems as the GPP—financial manage-ment, capital management, human resources management, information technologymanagement, and managing for results. It also looks at how those systems are intrinsicallylinked to state government, and provides recommendations on how both levels of govern-ment can improve performance in these areas.

The NJI Report notes that its researchers interacted much more closely with NewJersey municipalities than they do with governments across the nation in the GPP. Theyobtained data from municipalities through an elaborate series of surveys and question-naires, public documents, and interviews of professional managers.

The potential benefits of the NJI to New Jersey municipalities and the state agencies


PUBLICRESOURCES

GOVERNMENTPERFORMANCE

POLICYRESULTS

MANAGEMENTCAPACITY ENVIRONMENTAL

CONTINGENCIES

InformationTechnology

Management

CapitalManagement

HumanResources

Management

FinancialManagement

A SCHEMATIC OF GOVERNMENT MANAGEMENT CAPACITY

Exercise of Leadership

Use of Information

Allocation of Resources

Managingfor

Results

Figure 1.1

with which they interact are numerous. Municipal and state officials who participated inthe project gained the opportunity to learn more about municipal management systemcapacities, know where and how to improve those management systems, and, hence,increase performance.

Ultimately, the NJI strives to help the state and all of its 566 municipalities understandwhat constitutes good management systems and, in what contexts, how good manage-ment matters to strong performance.

The New Jersey Initiative Municipalities

The New Jersey Initiative was designed to analyze management capacity in a select groupof New Jersey municipalities: Brick Township, Elizabeth City, Franklin Township,Irvington Township, Old Bridge Township, Paterson City, and Trenton City.

These communities were invited to participate in the research project based on a vari-ety of factors that made them reflective of both the diversity and the complexity of NewJersey’s municipalities. The table below, which appears as Table 2.1 in the FinancialManagement chapter of the NJI Report, contains a brief overview of each community.

Table 2.1

AREA AND POPULATION OF THE SEVEN MUNICIPALITIES

Population

Pop.Density

(persons persquare mile)AreaMunicipality

Effective Tax

Rate*

SquareMiles 1990 2000 2000 2000

1998-2000% Change

Irvington, Essex Cty. 3.0 -0.53 4.9661,018 60,695 20,528

Paterson, Passaic Cty. 8.4 5.91 4.09140,891 149,222 17,675

Elizabeth, Union Cty. 12.2 9.60 2.80110,002 120,568 9,866

Old Bridge, Middlesex Cty. 38.1 7.05 2.6256,475 60,456 1,587

Total for all 566 NJ Municipalities 7,417.3 7,730,188 8,414,350 8.85 2.321,134

Trenton, Mercer Cty. 7.7 -3.69 3.6388,675 85,403 11,154

Brick, Ocean Cty. 26.2 14.51 2.3466,473 76,119 2,902

Franklin, Somerset Cty. 46.8 18.99 2.4342,780 50,903 1,088

Assessing Management Capacities in New Jersey Municipalities 11

Source: 2001 New Jersey Legislative District Data Book*Source: Tthe New Jersey Department of Treasury, Division of Taxation

Summary of Chapter

2Financial Management

IN THE FINANCIAL MANAGEMENT CHAPTER OF THE NJI REPORT, researchers focusintently on the complexities of raising and spending public funds in New Jersey, fromtax rates to budget cycles, from fiscal stress to the demand for public services. As aresult, their research provides insight on how municipal and state government mightbetter balance accountability with flexibility, control with empowerment, and report-ing with strategic planning.

Chapter Two begins with a review of the basic components of governmental financialmanagement: the ability to manage its funds through budgeting and appropriating,checking and controlling, and reporting and auditing.

It elaborates on the concepts of capacity and performance, and it addresses the finan-cial management environment for New Jersey municipalities.

The criteria used by the NJI to assess financial management capacity in municipalities,as well as the research methodology, are described in detail. The core section of the chap-ter discusses the results of that research in three categories: the “people factor,” meaningthe professional qualifications of managers; the financial management infrastructure;and, the results related to the specific GPP criteria.

Finally, the chapter presents recommendations for municipal and state government insix areas: budgeting, property valuation, tax collection, cash management, debt limita-tions, and expenditure cap law.

New Jersey Financial Environment

New Jersey, the most densely populated state in the nation, is considered an urban stateand thus governance of all its municipalities is inherently more difficult. However, theseven municipalities that participated in the NJI fall into two categories: urban and subur-ban.

The urban municipalities—Elizabeth, Irvington, Paterson and Trenton—have smallerthan average land areas compared to other New Jersey municipalities, but their popula-tion is nine to 20 times denser than the average. The suburban communities—Brick,Franklin and Old Bridge—have land areas two to three times the state average, but onlyone to three times the population density.

The report notes the importance of understanding the urban/suburban divide whenmeasuring financial management capacity because densely populated urban areas typical-ly require more financial resources to provide the same level of services as their less-popu-lated, suburban counterparts. As a result, the urban and suburban municipalities in theNJI are examined separately in the assessment of their financial management capacity.


Criteria for Assessing Financial Management

The criteria and sub-criteria used to assess financial management in the NJI Report arebased on those established by the Government Performance Project.

The four criteria, and their sub-criteria, are presented below and appear in the NJIReport as Table 2.4.

The NJI Report notes that research in this area is based on a 30-page survey com-pleted by five of the seven participating municipalities. For the two municipalitiesthat did not complete the survey, researchers collected information through inter-views and public documents. It also relies on interviews conducted with at least onelocal official in each municipality.

After completing interviews at the local level, researchers met with New JerseyDivision of Local Government Services officials to complete their information gath-ering.

Financial Management 13

1 Government has a multiyear perspective on budgeting.

2 Government has mechanisms that preserve stability and fiscal health.

3 Sufficient financial information is available to policymakers, managers, and citizens.

4 Government has appropriate control over financial operations.

Table 2.4

• Government produces meaningful current revenue and expenditure estimates.• Government produces meaningful future revenue and expenditure forecasts.• Government can gauge the future fiscal impact of financial decisions.

• Government’s budget reflects a structural balance between ongoing revenues and expenditures.

• Government uses counter-cyclical or contingency planning devices effectively.• Government appropriately manages long-term liabilities, including pension funds.• Government appropriately uses and manages debt.• Government’s investment and cash management practices appropriately balance

return and solvency.

• Government produces accurate, reliable, and thorough financial reports.• Useful financial data is available to government managers.• Government communicates budgetary and financial data to citizens.• Government produces financial reports in a timely manner.• Government is able to gauge the cost of delivering programs or services.• Government budget is adopted on time.

• Government balances sufficient control over expenditures with sufficient managerial flexibility.

• Government effectively manages procurement, including contracts for delivery of goods and services.

• Government has recovery plans and programs to support business continuation aftera disaster.

FINANCIAL MANAGEMENT CRITERIA

Summary of Results

The NJI Report finds that New Jersey municipalities are generally well-positioned in the“People Factor” category—meaning they employ well-qualified, professional people in keyfinancial management positions. It specifically notes both the education and experience ofkey financial managers in the seven participating municipalities and finds that a majority ofthese managers have spent their entire careers as public servants.

As a result, the report states, these officials exhibit “a profound, in-depth knowledgeabout New Jersey laws, local affairs, local financial management, and local politics.”

In terms of financial management infrastructure, the NJI research considered both insti-tutional frameworks—laws and rules—and physical infrastructure, meaning the technologyin use to meet requirements such as financial reporting and auditing.

The NJI Report finds that the state of New Jersey maintains “an elaborate system of localfinance laws that cover almost every detail of municipal financial management. “ While thissystem is designed to prevent insolvency at the municipal level, the report finds that oftenthese laws—i.e., budget approvals, limits on investments, budget caps—limit municipalities’ability to engage in long-term financial planning.

Regarding technology infrastructure, the NJI Report finds that the use of technology infinancial management varies greatly among municipalities and appears driven, primarily, bythe backgrounds of each community’s chief financial officer. It notes that the state needs todo more to promote computerization of local financial management.

The NJI Report presents its findings regarding financial management systems based oneach of the criteria presented in Table 2.4. Those results are condensed and presented below.

Criterion 1: Multiyear perspective on budgetingNew Jersey municipalities lack a long-term financial perspective. Municipal budgets arefor the current year only, and local finance laws and practices discourage even the timelyadoption of current budgets. This is a result of the state’s practice of announcing its stateaid figures for municipal governments long after their fiscal year starts.

Criterion 2: Mechanisms that preserve stability and fiscal healthFiscal officers in municipalities exercise fairly adequate fiscal discipline to keep their gov-ernments in structural balance. However, the research did note that municipalities sys-tematically underestimate revenues and overestimate expenditures to afford themselvesmore room for protection against unexpected events.

This behavior can be attributed to several factors, including the municipality’s inabili-ty to set up a “rainy day” fund; reluctance—and outright refusal in some cases—on thepart of municipal officials to undertake property revaluations; strict state limits onmunicipal debt; and state regulations on cash management.

Criterion 3: Sufficient financial information for policymakers, managers, and citizensThe NJI Report states that it is critical for government entities to make available suffi-cient and reliable information in a timely manner. As such, municipalities need toincrease their investment in information technology to improve information flow


and financial management in three key areas: (1) financial reporting, as a proxy forproviding information to policymakers; (2) availability of financial information tomanagers on an as-needed basis to boost managerial efficiency; and (3) timely budgetadoption as a proxy for good financial planning.

Criterion 4: Control over financial operations and managerial flexibilityAll five municipalities that completed the financial management assessment surveyexercise tight control over financial operations, as required by New Jersey law, accord-ing to the NJI Report. However, managerial flexibility is limited and requires furtherexploration by state and local officials.

Recommendations for Municipalities and the State of New Jersey

The full NJI Report presents six key findings in the area of financial management capacity.It summarizes the issues that led to the findings, then presents recommendations for howmunicipalities and the state of New Jersey might best address each finding. This summarypresents each of the six findings and its corresponding recommendations only; it does notreprint the summaries that led to each finding.

Finding 1: Absence of Long-Term Perspective on BudgetingRecommendation for New Jersey Municipalities: Financial planning is expensive in terms of time and resources, but it is a necessarycomponent of sound financial management. All municipal governments and theirlegislative bodies should devote adequate expertise and resources to this function.Recommendations for the State of New Jersey: State government and/or the Legislature may need to revise local finance laws so that:• Municipal budgets can serve as tools for financial planning and guidance,

not just for supervision.• The local finance laws allow, encourage, and require multiyear budgeting,

or at least multiyear perspectives on budgets, and long-term financial planning.

Finding 2: Outdated Property Valuation Recommendation for New Jersey Municipalities:Regular revaluation should be done in spite of the costs and time it demands. Themonetary benefits that result from timely valuation far outweigh the required finan-cial and manpower input. The equity and social justice regular revaluation providesfar outweigh the political pressures against it. Revaluation can lower the nominal taxrate and bring in needed resources.Recommendations for the State of New Jersey:The state should enforce its regulations more seriously. Administrative, even legal,actions should be taken to force municipalities to revaluate properties, particularly inthose municipalities where revaluations have not occurred for decades, when assess-ment ratios have fallen below the acceptable level. Alternatively, responsibility for

Financial Management 15

revaluation can be redirected to the county government. Occasional cases of legalaction have occurred in New Jersey to enforce revaluation.

Finding 3: Low Rate of Tax Collection in Some Urban MunicipalitiesRecommendations for New Jersey Municipalities:There are many reasons for the municipalities’ low tax collection rates, and a detaileddiscussion is beyond the scope of this report. Nevertheless, continuous improvementof management systems is the key to achieving better collection rates. Innovativemeasures are helpful. Tax sale, as some of the municipalities use, may be a method forother municipalities to consider. However, each municipality must consider its owncircumstances when deciding whether to apply methods that have proven successfulelsewhere.Recommendation for the State of New Jersey:It may be extremely difficult for the state to help raise the tax collection rate; never-theless, it should investigate feasible ways of doing so.

Finding 4: Inadequate Cash ManagementRecommendation for New Jersey Municipalities:Short-term investment is a new task for municipal financial officials. It is strategicallywise to endorse the relatively new management concept of short-term investmentand practice it as early as the legal structure allows. It will prove very rewarding, espe-cially when municipalities have more resources under their control.Recommendation for the State of New Jersey:It may be necessary to revise current restrictions in order to give municipal officialsmore room for managerial flexibility without sacrificing fiscal discipline or looseningprotection against high market risks or scandals.

Finding 5: Municipalities Are Circumventing Current Debt LimitationsRecommendation for the State of New Jersey:Municipalities are better classified if they are placed into multiple categories for debtlimits. For example, rapidly growing municipalities facing increasing service demandsand larger tax bases should be allowed to apply a higher debt limit than the 3.5 per-cent applicable to all municipalities.

Finding 6: Expenditure Cap Law Binds MunicipalitiesRecommendation for the State of New Jersey:Similar to Finding 5, the state should categorize municipalities according to theirvarying taxing capacities and service needs. Although they may be troublesome toimplement, multiple cap treatments are necessary to give municipalities more flexibil-ity in satisfying taxpayers’ service demands.


Summary of Chapter

3Capital Management

IN THE CAPITAL MANAGEMENT CHAPTER OF THE NJI REPORT, researchers pro-vide their assessment of how well local governments in New Jersey are setting thestage for proper management of their infrastructure and equipment assets—throughplanning, ongoing assessment, and frank dialogues with residents and elected offi-cials.

The report notes that for all levels of government, capital management hasgrown in scope and complexity as related technologies have evolved. It includes anational perspective on capital management by reporting that across the countrycapital spending has not kept pace with infrastructure needs, and that the mainte-nance of capital assets has been inadequate (Choate and Walters, 1981).

Chapter 3 of the NJI Report begins with a discussion of capital managementcapacity and systems, then reviews the five “best practices” in capital managementas identified by the U.S. General Accounting Office (1998). These “best practices,”listed below, coincide with the GPP criteria used to evaluate New Jersey municipali-ties.

• Organizational goals need to be linked to the capital decision-making process. • A long-term capital plan should be developed using an analytical

approach with project ranking based on established criteria. • Total life cycle costs should be considered in the planning and

selection process. • Project management techniques should be used to prevent project delays and

cost overruns. • Performance assessment should be ongoing.The chapter describes the capital management environment in New Jersey as one

where “the state exercises a high degree of control over capital and financial man-agement by local governments.” These controls tend to focus more on proceduralcompliance rather than efficient and effective capital management, according tolocal officials.

The criteria used by NJI to assess capital management capacity is presented inTable 3.1 of the report. The results of that research are presented along with anoverview of each municipality’s capital assets and functions in four key areas: capitalassets, capital planning, project management, and asset maintenance.

Recommendations for municipal and state government conclude the chapter.

Capital Management 17

Criteria for Assessing Capital Management

Summary of Results

The NJI Report finds that, for the most part, the participating municipalities appearto have the capital assets they need to provide community services. These communi-ties “exert some long-term planning efforts, due to the state’s requirement for a six-year capital plan….and no major cost overruns have resulted from project manage-ment issues.”

However, the research cites four areas requiring improvement: data systems, capi-tal project prioritization, citizen input and communication, and centralization.

Regarding data systems, the NJI Report notes that there are few good, centralized,standardized information systems in place that would allow municipalities to usedata to make rational decisions regarding capital projects and maintenance needs.

The report notes a prevailing lack of capital project prioritization criteria andanalysis. Instead, most capital planning decisions are made by departments and busi-ness administrators based on their individual judgement and experience without con-nection to an overall community strategic plan.

Citizen input is not included in the planning process in any formalized way, otherthan through the required public hearings on the capital plans, according to the NJIresearch, and capital plans are not written in a way that encourages public under-standing.

Finally, in the seven municipalities that participated in the NJI project, capitalplanning, project management, and asset maintenance occur at a decentralized level,within individual departments. The report notes, however, that Franklin Township ismoving towards a more centralized structure.

1 Municipality conducts a thorough capital planning process through:

2 Municipality monitors and evaluates projects throughout the implementation process.3 Municipality ensures the adequate and appropriate maintenance of capital assets by:

• Formal capital improvement plans that coordinate and prioritize capital activities.• Active participation by the public in identifying and prioritizing capital needs.• A multiyear linkage between operating and capital budgeting.• A multiyear linkage between strategic planning and capital budgeting.• Sufficient data to support analysis.

• Having accurate data on current assets.• Having sufficient data to plan maintenance adequately.• Funding maintenance adequately.• Conducting sufficient preventive maintenance to avoid major emergency repairs.

CAPITAL MANAGEMENT CRITERIA

Table 3.1



MunicipalitiesThe NJI Report presents seven recommendations to improve capital management inmunicipalities. It notes that these ideas have been used successfully in other jurisdictionsand are considered to be “best practices” in this area.

• Implement a centralized fixed asset inventory system providing a statement of condi-tion and maintenance history. This will provide a context and place in which to keeprecords on the condition of assets and a basis upon which to define new capital andmaintenance needs.

• Develop a regular program/schedule for condition assessments of buildings, equip-ment, and infrastructure. Again, fairly current information is required to determinemaintenance priorities.

• Develop or update an organization-wide strategic plan and link it to the capital plan.It is difficult to make good long-term capital decisions in a vacuum, without under-standing how projects fit into the vision for the community.

• Develop a comprehensive set of criteria to evaluate the importance and urgency of all capital improvement and maintenance requests.

• Establish a formal mechanism to obtain citizen input on the capital needs of the com-munity in advance of preparing the capital plan. The public participation processcould include such strategies as (1) conducting public meetings, (2) distributing acommunity survey, and/or (3) including citizen representatives on committees toevaluate capital project requests.

• Modify the capital budget document to provide more useful information about theprojects, what they entail, how they will impact the community, and why they are apriority. While the current format meets the state requirement, listing projects byname is not adequate for facilitating community input. This basic plan should be sup-plemented with a more informative, citizen-oriented document that explains the cap-ital planning process, the project evaluation criteria, and summary details for eachproject, including funding over the six-year period.

• Create a central capital improvement management committee composed of keyadministrative officials. This committee should develop criteria for project evaluation,implement standards for information systems and formats, prioritize requests basedon these criteria, monitor the progress of capital projects, and review summaries ofcondition assessment reports.


State of New JerseyCapital management researchers make the following three recommendations in the NJIReport for the state of New Jersey:

• Municipalities follow state regulations related to capital management but rarely gobeyond these requirements, to improve the efficiency and effectiveness of this function.Part of the reluctance to enhance capital management is a strong belief on the part oflocal administrators that they are highly constrained by the state. For example:

● A number of the interviewees noted that state officials could take away theirlicense. This fear of losing a license to work in one’s chosen profession mayrestrict local officials in their efforts to move beyond the minimum state require-ments for capital management. This fear is acknowledged by the state and is usedto require conformance with procedures that meet the state’s needs.

● These municipalities share a common complaint about the rigidity of procure-ment statutes. The state attempted to address this rigidity by amending the NewJersey State Code to give localities more flexibility. However, local officials contin-ue to view the “low bid” process as the only safe way to procure capital projects,even though the code now provides for alternative methods.

● Local officials emphasize their strict application of the state code and statutes.This can impede the ability to use innovative methods that are used successfullyin other states, and can lead to inappropriate decisions.

This perception of the state as a heavy-handed regulator and watchdog that focuseson preventing corruption seems to discourage local officials from improving manage-ment practices. We recommend that the state recognize local government as a validlevel of governance designed to and capable of acting with considerable degrees ofindependence and to work more closely with local administrators to understand theirconcerns and needs. The state could then convert its relationship with local govern-ment from one of fear and mistrust to one where the state is seen as providing valu-able help and guidance to localities.

• The state should abandon the perception that local governments in New Jersey aresomehow unique and that practices considered best practices elsewhere in the coun-try are not appropriate in New Jersey. The state should encourage the municipalitiesto adopt these practices.

• Under-assessed values restrict the amount of tax revenue available for pay-as-you-gocapital funding because of the high rates required to pay for current operations anddebt obligations. Municipalities are uniformly unwilling to conduct revaluations. Thestate would be well served to enact a “roll back” statute similar to the statutes enactedin some states in the 1980s to offset inflation. These statutes require reduction of


property tax rates to offset increases in assessments. The state could enforce the uni-form assessment by removing local officials who do not comply or by doing thereassessment itself. Other states offer precedent for this improvement, which wouldensure more uniform and accurate property assessment.


Summary of Chapter

4Human Resources Management

HUMAN RESOURCES MANAGEMENT IS AN ESSENTIAL COMPONENT of any manage-ment system as it guides and influences the behaviors of the most important asset of amunicipality—its employees, states the fourth chapter of the NJI Report.

This chapter offers a discussion of human resources management capacity and sys-tems focused on five key areas: workforce planning, hiring a skilled workforce, retaining askilled workforce, motivating the workforce, and workforce structure.

It explains in detail the HRM environment in New Jersey municipalities and the fourforces influencing human resources management here: the state, unions, the municipali-ty, and the federal government.

The criteria and methodology used by the NJI researchers are presented, and theresults of their research are reviewed in two segments: first, the role and structure of thehuman resources management offices; second, key findings related to the five HRM crite-ria.

In conclusion, the chapter presents recommendations for municipal governmentsand their human resources department, and for state government.

Summary of the Human Resources Management Environment

As noted above, four primary forces influence human resource management in New Jerseymunicipalities.

The state’s most direct influence comes when a municipality participates in the state’scivil service or merit system. Such municipalities then are subject to the state Departmentof Personnel’s authority on issues ranging from classifying employees and collecting appli-cations to disciplining employees and auditing payrolls. Five of the seven municipalitiesstudied by NJI participate in the state merit system.


CHARACTERISTICS OF PARTICIPATING MUNICIPALITIES

Brick Irvington Old BridgeFranklinElizabeth

Participates in state civil service YesNoYes Yes Yes No

Total number of employees 1639722467 1,510 600 715

Number of union contracts 665 14 6 6

Percent of employees unionized 95%96%95% 90% 90% 80%

Trenton

Table 4.1

Unions negotiate on behalf of their municipal members most often on issues ofwages, hours, overtime, benefits and grievance and disciplinary procedures. The complex-ities of these negotiations often is multiplied by the fact that numerous unions are negoti-ating on behalf of various constituencies in each municipality, the NJI Report states. InElizabeth, for example, municipal officials must negotiate with 14 separate labor unions.

Municipalities influence how their systems operate by developing and passing theirown rules and requirements, such as residency requirements. And, all human resourcepolicies and practices must conform to existing federal laws and regulations.

Criteria for Assessing Human Resources Management

The NJI uses five criteria, adapted from the GPP, to evaluate sound human resources man-agement capacity and systems in municipalities. These criteria are summarized below andappear in the NJI Report as Table 4.3.

1 Municipality conducts strategic analysis of present and future human resource needs.

2 Municipality is able to obtain the employees it needs.

3 Municipality is able to maintain an appropriately skilled workforce.

4 Municipality is able to motivate employees to perform effectively in support of the municipality’s goals.

5 Municipality has a human resource management structure that supports its ability to achieve its workforce goals.

• Municipality has sufficient data about its workforce to support analysis.• Municipality plans ahead to meet its future workforce needs.

• Municipality hires employees in a timely manner.• Municipality managers have appropriate discretion in the hiring process.• Municipality conducts effective recruiting efforts.• Municipality hires appropriately skilled and qualified employees.

• Municipality conducts appropriate training to develop and maintain employee skills.• Municipality is able to retain skilled and experienced employees.• Municipality is able to discipline employees.• Municipality is able to terminate employees.

• Municipality is able to reward superior performance through pay and other cash and non-cash incentives.

• Municipality is able to evaluate the performance of its employees effectively.• Sufficient opportunity for employee feedback exists.

• Municipality’s classifications system is coherent and of the appropriate size.• Municipality personnel policies permit appropriate flexibility in the civil service and pay

structures.• Municipality’s human resources goals and policies are communicated to employees.• Municipality is able to maintain productive labor-management relations.

HUMAN RESOURCES MANAGEMENT CRITERIA

Table 4.3

Human Resources Management 23

Summary of Results

The NJI Report presents its HRM results in two segments: first, the role and structure of thehuman resources management offices and second, key findings related to the five HRMcriteria. Each are summarized below.

The Role and Structure of HRM Offices

Personnel management is extremely complex in New Jersey municipalities, according tothe NJI Report. Within each municipality, there are multiple personnel systems influ-enced by many different stakeholders.

Nationally, a broader focus has developed in recent years regarding the role and struc-ture of the human resources management office—one that emphasizes collaboration andpartnership in helping leaders and managers achieve government goals. In New Jersey,however, the NJI study suggests that municipalities continue to adhere to a more tradi-tional model of personnel management as evidenced by these findings:

• Human resource management is treated as a support function in most municipalities

• The personnel office is largely process- and compliance-oriented• Municipalities in the NJI study have not conducted formal, strategic planning within

the HRM function

Key Findings Related to the GPP Criteria

Criterion 1: Workforce planning• Municipalities focus little systematic, centralized effort on planning for future work-

force needs• Data and infrastructure to support analysis in HRM is limited

Criterion 2: Hiring a skilled workforce• Civil service municipalities appoint employees provisionally, utilize more testing,

and are less likely to utilize temporary workers• Most selection processes are centralized• Residency requirements constrain the selection process• Recruiting efforts and innovative techniques are limited• Perceptions of the quality of hires do not vary between civil service and non civil

service municipalities

Criterion 3: Retaining and training a skilled workforce• Employee career opportunities are typically limited to their current department• Training efforts are limited beyond those required for state certification• State government provides most management training; the central HRM division

provides most computer training• Education incentives are provided to most employees


• Turnover in municipalities is low compared to previous GPP research in cities, coun-ties and states; most turnover comes from retirement

• Disciplinary processes are labor-intensive and inflexible

Criterion 4: Motivating the workforce• Little formal opportunity to provide performance-related feedback to employees• No effort to link performance with rewards• Reward systems encourages longevity in a position• Little use of non-monetary rewards to recognize outstanding performers• Municipalities offer excellent benefits

Criterion 5: Structuring the workforce• The classification systems are a source of frustration• Labor-management partnerships are starting to be utilized

The NJI research finds that most municipalities need to pursue reforms, especially atthe state level, to give human resources managers additional tools and flexibility to hire,manage, and retain staff. At the same time, these municipalities can pursue improvementsat the municipal level by modernizing their human capital approaches.

The NJI study did not find processes in place to enable HRM divisions to becomestrategic partners with other entities in government. In other words, the municipalitiesengage in relatively no long-term planning in the area of HRM.

The report suggests that all municipal HRM departments should ask themselves thefollowing set of questions as part of an ongoing self-study:

• Do the HRM policies and procedures support the municipality’s strategic direction?

• Does the organizational structure of the HRM division fit with the HRM policies and procedures?

• Does the performance (including pay) system fit the structure of the municipality?

• Is the municipality developing leaders with skills needed to meet the strategic direction?

• Has internal communication with employees been developed to support and communicate the strategic vision?


The NJI Report presents recommendations in the Human Resources Management area inthree sections: municipal level, HRM department level, and state level.

Municipal-Level Recommendations• Implement a strategic planning process that includes HRM• Adopt technologies that support HRM and that interface with the payroll and other

Human Resources Management 25

municipal information systems• Develop meaningful performance evaluation systems• Develop formal systems that link employee performance and recognition• Administer an annual employee survey• Update job classification titles and job descriptions

HRM Department-Level Recommendations• Develop a formal mission statement• Engage in regular self-studies about the roles and responsibilities

of the HRM staff• Collect HRM-related data – especially HRM outcomes – that can be

used to assess departmental performance and applied in the planning process• Better utilize the internet and local websites for communication both within the

municipality and with external audiences

State-Level Recommendations• Delegate more authority in the hiring process to the municipalities • Increase the number of candidates that localities can select (eliminate

the “Rule of 3”)• Reduce the number of job titles and the number of titles that require testing


Summary of Chapter

5Information Technology

“INFORMATION TECHNOLOGY (IT) HAS BECOME CENTRAL to public manage-ment, but at the same time, has become increasingly difficult to manage,” beginsthe fifth chapter of the NJI Report. What follows in this chapter is an in-depth lookat the condition of IT management capacity in the study’s seven municipalities.

Specifically, Chapter 5 starts with a brief description of six IT managementcapacity subsystems: IT planning capacity; capital procurement and maintenancecapacity; application development and procurement capacity; data managementcapacity; IT human resources management capacity; and systems management andmaintenance capacity.

It then considers the environment for IT management capacity in New Jersey,noting its intrinsic links to other government units—the state, special districts andcounty government, and police services—that can act “as a facilitator or as a con-straint.”

The state, for example, affects local government IT management in three ways:mandates, grants, and technical assistance, notes the report. In terms of special dis-tricts and county governments, the NJI Report finds that both can provide supportin terms of services or capital, but their service demands or mandates can also beconstraints. In the area of police services, the report finds that these systems—though tied both administratively and politically directly to the municipality—have developed “somewhat separately” from the main municipal system.

The chapter then presents the criteria and the data collection process used tomeasure local government’s IT management capacity. Finally, it provides thedetailed results of this research and makes recommendations for municipalities andthe state of New Jersey.

Criteria for Assessing Information Technology Management

The New Jersey Initiative evaluated IT management capacity against six key criteria,which were partially adapted from the Government Performance Project methodol-ogy. These criteria appear as Table 5.1 in the NJI Report and are reprinted on the fol-lowing page.

Information Technology 27

Summary of Results

The results section of Chapter 5 is divided into six sections that correspond to each of theevaluative criteria. A brief summary of the results in each category follows. For moredetailed information, consult this section of the full NJI Report.

Criterion 1: Planning CapacityThe NJI Report finds capital infrastructure for local government IT systems, like theoverall capital planning process, requires formal strategic planning, and that it is toooften ad-hoc and episodic.

Municipalities with any type of planning process are further along in the develop-ment of their information systems and exhibit greater IT capacity, states the report.And, the critical factor for capacity “is either someone at the top providing somelonger-term vision or direction or the existence of a more formal multiyear process,”the NJI Report says.

Criterion 2: Capital Procurement and Maintenance CapacityAll seven municipalities that participated in the New Jersey Initiative divide this areainto two parts: large-scale procurement and the replacement process.

For large-scale capital purchases the municipalities used one of three strategies:capital bonds, grants from federal and state governments, and internal funding ofone-time operating budget expenditures, according to the report. But for all munici-palities, upgrading core infrastructure remains “problematic” because of a lack of


1 Municipality conducts strategic analysis of present and future IT needs.

2 Municipality obtains IT infrastructure as needed.

3 Municipality obtains software applications as needed.

4 Municipality adequately stores and retrieves data.

5 Municipality obtains and retains adequate IT human resources.

6 Municipality reliably operates and maintains IT systems.

• Municipality is able to replace network hardware when necessary.• Municipality is able to replace desktop systems when necessary.

• Municipality is able to replace network hardware when necessary.• Municipality is able to replace desktop systems when necessary.

• Municipality is able to develop and implement its own software.• Municipality is able to efficiently purchase appropriate software in a timely fashion.

• Municipality maintains adequate data for analysis and decision-making.• Municipality views and manages data as an enterprise-wide resource.• Municipality integrates data across functions for analysis and decision-making.

• Municipality locates and hires adequate IT staff.• Municipality retains and develops IT staff.• Municipality trains non-IT staff in use of IT systems and applications.

• Municipality maintains reliable operations of IT network.• Municipality has effective disaster and recovery procedures.• Municipality effectively manages vendor-provided IT services.

INFORMATION TECHNOLOGY MANAGEMENT CRITERIA

Table 5.1

long-term planning capacity.Regarding hardware replacement, the research finds that most municipalities

handle it well through the budget process with IT management oversight, althoughdepartment managers seldom make IT a priority.

Criterion 3: Application Development and Procurement CapacityThe research in this area finds that all participating municipalities purchase theiroperating system software from vendors and few maintain significant internal capaci-ty to generate their own software applications. In those municipalities that do main-tain internal capacity to write software, however, the benefits are significant. Theyinclude quick turnaround time for development, enhanced flexibility; and applica-tions tailored to a municipality’s specific needs.

Criterion 4: Data Management CapacityResearch in this area, according to the NJI Report, finds that most municipalities man-age their data in the more traditional manner around specific uses or applications,rather than through a “database management system” that integrates all data intoone interconnected set of files.

The report notes the growing popularity of using geographic information systems(GIS)—because the state of New Jersey provides incentives for using them—but alsofinds that the complexity of the program creates some use barriers at the municipallevel.

Criterion 5: IT Human Resources Management CapacityIn this area, the research looks at two major components—hiring and retaining ITstaff and training other staff on various applications.

The NJI Report notes that all participating municipalities employ technical staffto maintain the operation of the IT infrastructure, but less than half employ staff withthe ability to develop their own applications. This may be partially attributed to theexpense of hiring programming and systems analysts, the report finds.

Regarding training, the municipalities all identified demands for IT help andtraining “as almost infinite.” Vendors, the report states, are used heavily in the provi-sion of training for municipal staff.

The NJI Report also presents research on the quality of training at the municipallevel, but notes that this research relied heavily on those municipalities that developtheir own applications internally. It found IT department training rated the highest,and vendor training the lowest.

Criterion 6: Systems Management and Maintenance CapacityThe NJI research identifies three basic models for operations at the municipal level:client server systems, department computing, and contracted services. All of themunicipalities in the project used some client server and departmental systemsapproaches. Two municipalities contract out for central data processing and mainte-nance activities.


Additionally, “there a strong correlation between those municipalities withstrong IT leadership and internal application development capacity,” notes the report.


MunicipalitiesThe NJI Report makes eight recommendations in the IT management capacity area for theseven municipalities that participated in this project and suggests they may be applicablefor other municipal governments in New Jersey.

• Take advantage of county government as a possible service provider, particularly forspecific data management functions. This type of cooperation can be used to reducecost, as well as build cooperative capacity for other purposes such as planning andcapital purchasing (see Recommendation 3).

• Develop and maintain a formal multiyear IT planning process with specific compo-nents related to capital planning for IT infrastructure.

• Take advantage of capital pooling with the county or special jurisdictions, especiallyschools and libraries when they purchase IT hardware.

• Develop some internal capacity to generate applications; but it should not be the onlyvehicle for application development. Sole reliance on vendors for software dramatical-ly reduces a municipality’s IT management capacity.

• Develop and maintain a strong internal IT capacity to evaluate vendor provided soft-ware to ensure compatibility with network hardware, software, and load require-ments.

• Develop an integrative approach to data management, which treats data as an enter-prise-wide resource via database management systems and/or GIS.

• Offer more IT training and have it provided by IT staff and vendors. Training for theuse of IT applications is even more important than is typically thought.

• Training can be augmented through use of local adult education programs, communi-ty colleges, and universities.

State of New JerseyThe NJI Report makes the following recommendations in relation to state governmentand its role in IT management capacity.

• The state should develop different strategies for local governments with different lev-els of IT management capacity. While most of the existing grant and technical assis-


tance programs aim to support municipalities with little or no IT management capaci-ty, the state does not provide much support for municipalities that already have sig-nificant capacity.

• For municipalities with various state agencies, the state needs to consider dataexchange mechanisms that are less restrictive and permit more flexible responses bymunicipalities.

• While GIS is the more common approach to data management integration – in partbecause of state-level support – it is a more expensive approach, which requires spe-cialized hardware and software. Therefore, the state should help support the develop-ment of database management systems to integrate data, such as those developed byOld Bridge in expanding property tax system files to citizen-level data.


Summary of Chapter

6Managing for Results

IN MANAGING FOR RESULTS (MFR) CHAPTER OF THE NJI REPORT, researchers explorehow skilled municipal governments are in measuring their performance and reporting onthe overall success of their on-going programs and new initiatives.

Chapter 6 begins with an explanation of the concept of managing for results and itspractice, as well as its relevance to municipal governments. “Simply put,” the report states,“managing for results tells people how well public programs are doing, and it is an impor-tant aspect of accountability in government.”

The benefits of managing for results are numerous, according to the report. Amongthem: helping officials meet the performance standards citizen-stakeholders expect fromgovernment, as well as increasing stakeholder trust in government. However, robust MFRsystems at the municipal level are the exception, states the report, not the rule.

The chapter reviews the essential components of managing for results systems—strate-gic planning, data collection, performance measurement, verification, and continuousfeedback—and looks at the MFR environment in New Jersey. It notes that New Jersey isone of 17 states without “governing for results legislation.” However, it finds the state’sexecutive branch is pursuing some performance management activities, notably The NewJersey State Plan and the Sustainable State Report. The later, adopted by Executive Order,encourages state departments and agencies “to establish practices, exchange information,and report progress toward reaching sustainability goals.”

The criteria and methodology for assessing MFR are reviewed and the research resultsare then presented in detail. The chapter concludes with a series of multi-level recommen-dations for municipal and state officials.

Criteria for Assessing Managing for Results

The criteria used to evaluate MFR at the municipal level were adapted from theGovernment Performance Project. They appear as Table 6.1 in the NJI Report and arereprinted on the following page.

Summary of Results

The MFR research revealed three major themes regarding the state of managing for resultsin municipalities, according to the NJI Report. They are:

• All of the participating municipalities lack formalized, municipality-wide MFR sys-tems.

• Some municipalities have “rudimentary MFR systems,” others have some “MFR-like”elements.


• All municipalities experience constraints on MFR implementation.The report then presents its findings in each of the four criteria categories. Those find-

ings are summarized here; for more information, consult this section of the full NJIReport.

Criterion 1: Strategic PlanningIn this area, the research makes three significant findings. First, leadership visionexists in all the municipalities who participated in the NJI project. Second, none ofthe municipalities involved has a formal, municipal-wide strategic plan. Third, strate-gic plans are rarely developed at the municipal department level.

Criterion 2: Performance measuresResearchers found that few municipalities use performance measures to any signifi-cant extent, and measures that are used lack depth and complexity. The NJI Reportalso notes that the use of performance targets is rare.

Criterion 3: Use of Performance DataAs might be expected based on results in the performance measures category,researchers found that the use of performance data at the municipal level is “mini-mal.”

Criterion 4: Communication of resultsNJI researchers found that although there are a variety of avenues for municipalitiesto communicate with the public and stakeholders, most generally do not communi-cate results information. The report notes that comprehensive performance report-ing “often faces stiff resistance from government leaders” who fear the “political per-ils” of publicizing performance data in their community.

Additionally, the research efforts described in this chapter found numerous con-straints on the implementation of managing for results practices. There are, notes thereport, few statutory requirements for MFR at the municipal level and resistance at

1 Municipality engages in results-oriented, strategic planning.

2 Municipality develops indicators and evaluative data that can measure progress toward results and accomplishments.

3 Municipality leaders and managers use results data for policymaking, management, and evaluation of progress.

4 Municipality clearly communicates the results of its activities to stakeholders.

• Strategic objectives are identified and provide a clear purpose.• Municipality leadership effectively communicates strategic objectives to all employees.• Municipality plans are responsive to input from citizens and other stakeholders, including

employees.• Agency plans are coordinated with central municipality plans.

• Municipality can ensure that the data are valid and accurate.

MANAGING FOR RESULTS CRITERIA

Table 6.1

Managing for Results 33

this level may be stronger because political accountability is less diffuse than in largergovernment entities.

A general lack of developed institutional systems to gather, process, use andapply performance data also hinders a municipality’s ability to embrace MFR sys-tems, the NJI Report states. Other factors such a lack of resources, “simple bureaucrat-ic inertia,” and union contracts also limit implementation of MFR.


The NJI Report presents recommendations in the managing for results category formunicipal governments to pursue on their own, for the state to pursue on its own, and formunicipalities and the state to pursue together. These recommendations are reprinted infull from the NJI Report.

Municipalities1. Council members, mayors, business administrators, department heads, and managers

should learn about practices of the most advanced managing for results systems locat-ed in:

a. Trenton City, Franklin Township, and other municipalities in New Jersey b. Cities recognized as leaders in MFR, such as Charlotte, North Carolina; Portland,

Oregon; and Sunnyvale, California (Ammons, 2001)c. Cities with MFR systems ranked the highest by the Government Performance

Project in 2000: Phoenix, Arizona; Austin, Texas; Indianapolis, Indiana;Milwaukee, Wisconsin; and San Diego, California (Barrett and Greene, 2000)

2. Councils and mayors should give sufficient discretionary administrative power tobusiness administrators so they can implement managing for results systems. TheFaulkner Act permits business administrators to “have the power…to prescribe stan-dards and rules of all departments, to prescribe standards and rules of administrativepractice and procedure,” and this power is “potentially very broad, if the mayor andcouncil want [it] to be” (Wolfe, 1994, 12).

3. Business administrators, department heads, and managers should implement manag-ing for results systems that are best suited for their municipality.

4. Performance goals should be clearly linked to departments, programs, and personnelin municipal budgets and other public documents.

5. Appropriate municipal officials should encourage the New Jersey State League ofMunicipalities, State of New Jersey Department of Community Affairs, and NewJersey Legislature to increase attention to performance-based management.

State of New Jersey1. Executive branch leaders should learn about practices of the most advanced managing

for results systems located in: a. States recognized for their long-term experience with MFR, such as Florida, North

Carolina, Minnesota, Oregon, and Texas (Liner et al., 2001)b. States with MFR systems ranked the highest by the Government Performance


Project in 2001: Iowa, Missouri, Texas, Virginia, Washington, Florida, Kentucky,Louisiana, Michigan, and Utah (Barrett and Greene, 2001)

2. With the leadership of the governor, the executive branch should increase managingfor results activities in state government agencies and departments.

3. The Department of Community Affairs should encourage and assist the state’s munic-ipalities with implementing managing for results systems. Assistance should be givenbased on the needs of municipalities according to different categories of municipali-ties.

4. The New Jersey Legislature should perform the following actions:a. Consult with the National Conference of State Legislatures (NCSL) about how leg-

islation in the states can improve managing for results (or “governing for results”)activities in state government and about the role of the legislature in the manag-ing for results process.

b. Consult with any of the 33 states that have managing for results legislation andlearn how their legislation calls for strategic planning, performance measure-ment, performance reporting, and performance budgeting.

c. Pass legislation addressing managing for results that best serves New Jersey and itscitizens.

Municipalities and the State of New Jersey Leaders in municipal and state governments are in the position to cooperate and activelywork toward the application of managing for results initiatives. In this spirit of coopera-tion, the authors recommend the following.

1. Council members, mayors, business administrators, department heads, managers, andstate officials should learn:

a. The principles and methods of performance-based managementb. The principles and methods of performance measurement c. The primary lessons from the federal government’s efforts to implement the

Government Performance and Results Act (GPRA) of 1993 2. Business administrators, department heads, managers, and state officials should seek

guidance and assistance from professional associations and organizations such as thefollowing:

a. American Society for Public Administration (ASPA) Center for Accountability andPerformance (CAP)

b. Governmental Accounting Standards Board (GASB) c. Government Finance Officers Association (GFOA)d. International City/County Management Association (ICMA) Center for

Performance Measuremente. National Academy of Public Administration (NAPA) Center for Improving

Government Performance3. Council members, mayors, business administrators, department heads, managers,

and state officials should consider the incremental approach to managing for resultsthat the federal government used to implement the Government Performance andResults Act of 1993. Many of the lessons learned from the federal government’s suc-

Managing for Results 35

cesses and failures can benefit the municipal level of government. 4. State and municipal governments should hire external auditors for periodic reviews of

performance results. This makes the feedback process more effective, helps to finetune measurements, and creates a disincentive to simply “go through the motions.”


Conclusion

Improving Management Capacity in New Jersey Municipalities

(Editor’s Note: This chapter is reprinted in full from the NJI Report)

THE RESULTS OF THE ASSESSMENT OF MANAGEMENT SYSTEMS in seven New Jerseymunicipalities invited to participate in the New Jersey Initiative – Brick Township,Elizabeth City, Franklin Township, Irvington Township, Old Bridge Township, PatersonCity, and Trenton City – indicate that commendable management practices are ongoing.Clearly, professional managers in these municipalities and their teams of supportingemployees are steadfastly making government work for their citizens. Researchers wit-nessed first-hand in these municipalities extremely dedicated and resourceful public ser-vants.

Still, the findings of our evaluation of management systems in these municipalitiesalso point to the need for reforms. Improving management capacity in the areas of finan-cial management, capital management, human resources management, informationtechnology management, and managing for results is necessary and will require signifi-cant commitment to change. More specifically, improving management capacity in theseand other New Jersey municipalities calls for a stronger collaborative approach amongmunicipalities and the state, recognition of vital reforms, and bold actions. Going beyondmere adjustments and achieving higher management performance will require new waysof doing business. There are no quick and easy fixes.

Yet we firmly believe that the state and its municipalities can make the recommendedchanges that will lead to more effective governance. Every day the state of New Jersey andits many local governments affect and shape the lives of all New Jersey citizens.Furthermore, these governments are engaged daily in delivering essential services to NewJersey residents. Expanding management capacity will result directly in revitalized, high-er-performing, and more responsive government.

Collaborative Approach From Municipalities and the State

An incontrovertible conclusion of this study is that any success in improving manage-ment capacity depends on synergetic actions by both municipalities and the state. At thestate level, change must come from both executive and legislative branches. It is time tobuild upon a collaborative approach by municipalities and the state. Both levels of govern-ment are currently cooperating in many ways to govern for the benefit of New Jersey. Buta new era means a renewal of bilateral efforts must be undertaken. Of course, many otherinterests play roles in the governing process. Although we focus on the state and munici-palities, we acknowledge that entities such as labor unions, citizen groups, interest groups,and the media will have to be considered.

At the municipal level, many communities across the state are endowed with highlyqualified and professional managers. These business administrators, chief financial offi-

Conclusion 37

cers, and department-level directors have impressive credentials and experience.Competent managers contribute great effort, work within the laws and boundaries oftheir authority, and get the business of government done well. Our findings suggest thatmunicipalities can do their work in ways that would increase management capacity. First,municipalities should take advantage of the latitude provided under their charter, such asthe New Jersey Optional Municipal Charter Law, known as the Faulkner Act, that per-mits councils and mayors to grant business administrators broad powers and authorityto operate and manage municipal affairs. With the appropriate level of authority theyneed, business administrators are able to exercise their management skills andstrengthen management systems. Second, municipal leaders can create an environ-ment that recognizes the value of and rewards management initiative, innovativeactions, implementation of best practices from other locales, and prudent risk-taking.

At the state level, professional policy-makers are extremely knowledgeable, experi-enced in the inner workings of local government, and committed to improving govern-ment. These highly proficient policy-makers rightfully seek to execute the applicable laws,provide guidance to municipalities, and protect the public’s interest. Like municipalities,the state can make meaningful contributions that will go a long way to improve munici-pal management capacity. First, the state may experience positive results if it modifies itsoversight relationship with municipalities. The current approach emphasizes imposingthe state’s view of appropriate performance and regulating to prevent wrongful behaviorby municipal officials. For those municipalities where good performance warrants it, shift-ing to an approach that gives greater prominence to independent capacity building andtrust might lead to higher performing government. Second, the state should work withmunicipalities to find ways to provide regulatory relief where appropriate, generate flexi-bility for management decision-making, and furnish management tools to local govern-ments.

Vital Reforms

Comprehensive explanations, findings, and recommendations for the management areasof financial management, capital management, human resources management, informa-tion technology management, and managing for results appear in Chapters 2 through 6,respectively, of the full New Jersey Initiative report. For each area, specific recommenda-tions are made for the state of New Jersey and the municipalities studied. The recommen-dations for municipalities are also applicable to other New Jersey municipalities with simi-lar characteristics and conditions. Overall, four major findings – where vital reforms arenecessary – emerge from across all management areas:

Vital Reform Area #1: State regulatory and procedural restraints impede local govern-ment management innovation.

Vital Reform Area #2: In its regulatory management oversight role, the state does notsufficiently differentiate among municipalities in terms of their characteristics andperformance.


Vital Reform Area #3: Municipalities lack formalized, centralized, and long-termmanagement planning activities.

Vital Reform Area #4: Municipalities do not sufficiently exercise the managementprerogatives that are available to them.

Bold Actions

Vital reforms require bold actions. In order to reform management systems in New Jerseymunicipalities, the following expedient measures are recommended for the state of NewJersey, the municipalities assessed, and other New Jersey municipalities with comparablecharacter and conditions. The recommended bold actions correspond with and are aimedat addressing the vital reform areas. For example, the first bold action is targeted towardresolving the first vital reform area.

Bold Action #1: The state should reduce burdensome and costly restrictions onmunicipal management activities where appropriate; allow more flexibility and dis-cretion for municipal managers; enhance state mechanisms for providing technical,financial, and other kinds of assistance to municipalities; and create incentives forentrepreneurial management behavior by municipal managers.

Bold Action #2: The state should further its efforts to classify municipalities in multi-ple categories, apply different strategies to assist the various categories, and customizeregulatory treatment to fit the specific needs and circumstances of different munici-palities.

Bold Action #3: Municipal councils and mayors should delegate greater authority tobusiness administrators so they can bolster strategic planning; strengthen their man-agement systems; formalize and centralize management oversight activities; andwhere it is best to do so, integrate management systems across departments.

Bold Action #4: Municipalities should be more innovative in applying managementpractices, take reasonable risks when implementing new management practices, andask for guidance and assistance when needed from the state.

Supporting evidence, examples, and deeper analysis that logically lead to the vitalreform areas and recommended bold actions are found in the full New Jersey Initiativereport. Readers are encouraged to read Chapters 2 through 6 for greater specificity and afuller understanding of the management areas.

The state of New Jersey and its 566 municipalities have the same goals – make democ-racy function as it was designed to and deliver public services in the most effective, effi-cient, consistent, and equitable means to citizens. Governments across the nation at alllevels are seeking ways to strengthen their capacity to achieve better government perform-ance. The seven New Jersey municipalities that volunteered for the New Jersey Initiative

Conclusion 39

are commended for having the foresight and courage to participate. Our findings and rec-ommended bold actions sharply call attention to the state and local governments takingsteps to build management capacity together. Building municipal management in NewJersey can be accomplished through a shared effort. We strongly encourage the state andits municipalities to keep the momentum going toward higher levels of effective govern-ment. New Jersey government leaders and citizens always have faced challenges with res-oluteness. A future of excellence in governance awaits New Jersey.


Documents

new jersey initiative · 2010. 9. 24. · Summary of THE NEW JERSEY INITIATIVE: Building Management Capacity ... Melissa Mink..... Human Resources Management Research Assistant Alyssa