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Joint | June 23, 2014 | Chamber | Program Evaluation

Full MP3 Audio File

Let me call PED Oversight to order. First remarks, Representative Howard? No remarks. I have none. You have in your folders the minutes from the June 9th meeting. What is the…? I have a motion from Representative Lewis to approve the minutes of June 9th, seconded Senator Hise. All in favor please say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Opposed, no. Thank you. Next Dr. McGorty, update on PED projects. [SPEAKER CHANGES] Thank you. Good afternoon Mr. Chairman and members. I’m Kiernan McGorty, a principle evaluator with the Program Evaluation Division. Today I’ll provide just a five-minute status update on all the projects on our 2013-15 work plan, and you should have in front of you in your packet a copy of the slides for the presentation and then our 2013-15 work plan as amended. The current work plan includes 21 projects. These projects have either been completed, are underway or are pending. Four of these projects were legislatively mandated, as indicated by the asterisk next to them. The Program Evaluation Division has completed five projects so far, which produced a total of nine reports which were all presented to this committee. We have six projects underway and I’ll go into a bit more detail on each of those now. The division divided the project reviewing adult alcohol and drug abuse programs, prescription drug abuse and programs for veterans among three teams. If you’ll recall, in April the first team reported on issues with the state system for monitoring the abuse of prescribed controlled substances. The second team is developing an inventory of state programs and services for veterans and their families, and the third team is doing the mandated review of the most efficient and effective ways to operate inpatient alcohol and drug abuse treatment programs or aid acts. The project on local child support enforcement programs is reviewing operational effectiveness and efficiency of county child support enforcement offices, and the project on overnight respite mandated us to determine the success of a legislative pilot that authorized adult daycare facilities to offer overnight respite services. Another project reviews licensor fees for occupations regulated by the department of insurance that are not directly related to the insurance industry. We also have a mandated project on the feasibility of a single occupational licensing agency, and this project is looking at the structure, organization and operation of those various independent occupational licensing boards and considering the feasibility of establishing a single state agency to oversee to operation of all or some of the occupational licensing boards. In addition, this evaluation will identify licensing boards that should be eliminated or consolidated with another board. And earlier this month, this committee added the personal services contract to our work plan, which is reviewing all non-I.T. personal services contracts for compliance with state laws per review, approval and reporting. So just to give you an idea of what to expect for the remainder of the year, the Program Evaluation Division expects to deliver seven more reports by the end of this year. In July, the committee will receive the report on local child support enforcement. In September, the committee will receive the mandated study on the overnight respite pilot. From the three-part series on adult alcohol and drug abuse programs, prescription drug abuse and programs for veterans, the second report on veterans’ programs will be presented in September and the…

A third report on Aidex will be in October. And by the end of the year we also plan to present the two mandated projects on licensure fees for non insurance occupations and the feasibility of a single occupational licensing agency along with your recent addition to our work plan of reviewing the use of personal services contracts. To update you on what might be coming our way based on this short session the Senates version of the appropriations act includes three studies for this committee to consider putting on the work plan. One is a study of the ways to improve North Carolinas medical examiners system and best practices in death investigations. Another is the study of the benefits and drawbacks of requiring local alcohol beverage control boards to redirect payments they currently send to DHHS to instead send them to the ABC commission and the purpose of those funds is for substance abuse research, treatment, and education. And another study is on North Carolinas shellfish lease and franchise program, looking at greater program efficiency and effictiveness. The Senates version of the appropriations act also directs this committee to include in the work plan a study of the states various programs related to housing, for duplication and gaps. And lastly, the regulatory reform act along with two other bills directs this committee to include in the work plan a study of the benefits that may result from the merger of Public Water Systems and Waste Water Collection and Treatment Works. If you want to take a closer look at the divisions current evaluations you may do so on our website where the status of each project is listed under our current evaluations page. For projects that are under way you just click on the link that says weekly update to get a summary of the activities completed by the team for the previous week. And that concludes the status report. I would be happy to answer any questions at the direction of the chair. [SPEAKER CHANGES] Questions from the committee? Senator Tarte [SPEAKER CHANGES] Just one as the freshman on the back bench, Whats the criteria to determine which study groups we would proceed with? Related to things on slide nine. [SPEAKER CHANGES] For you all to determine what you want to include in our work plan? What we've done in the past is we've done a survey of the members of the committee to have them prioritize and that sets the order of the work plan and determines, usually we take about twenty projects on the work plan. [SPEAKER CHANGES] So Shirley wasn't correct when she told me she gets to decide? [SPEAKER CHANGES] It's a matter of cumulative voting actually. Other questions, Senator Hanes [SPEAKER CHANGES] Do we have any sort of timeline on the start of pending projects? I know some of these are starting to roll off ??? the timeline but do we have any on the start of pending projects? [SPEAKER CHANGES] So what we've tried to do today is indicate to you what you should expect to hear from us by December. We are also, that slide where I said what's happening during short session, some of those would then become mandated projects for us that might delay the start of others on that pending list but we'll have a better idea at the conclusion of short session where we stand on new projects that some, there was a slight nuance on how I presented it to you. Some of them are for you to consider and some of them are just directing that they be put on the work plan. And so we'll have a better idea of which of the pending projects we would get to. If you look back at the pending projects list, they are in the prioritization order that you voted on initially. So that would give you some indication. And they can of course rollover to your 20, 15, 16ths work plan cycle. [SPEAKER CHANGES] Other questions? Seeing none. Thank you Karen. I was remiss earlier, I did not introduce our Sergeants at Arms, let me do that. We have with us from the House Reggie Sills, John Brandon.

John? [SPEAKER CHANGES] Martha Gattison and Dave Collins, and from the senate we have Matt Erber, Howe Roach, and Ernie Sheryl. Welcome to HW. Thanks for all the help you give to us. I also need to recognize out state auditor who is here with us, and for once we've not invited her to make a presentation of her audits, but I am confident we will do so again in the very near future and we've had some conversations about some of that. If we try to work in sort of an integrated fashion in doing that sort of thing. Okay, thank you. Next on out agenda is what we're all waiting for I suspect. Mr. Joe Colletti, Deputy director of NC Gear is here to introduce us to NC GEAR, the status and we'll open the mater to questions at some point later on. Thank you. Mr. Colletti, welcome. [SPEAKER CHANGES] Thank you Mr. chairman, and Representative Howard, other members. Also, I want to thank John Turcotte and all the program evaluation staff for their assistance so far in the work that we've been doing, the cooperative relationship that we've been able to have with them, and recommending that I volunteer under the bus this afternoon. I appreciate that and look forward to answering your questions. Hopefully before you ask them. I am, as the chairman said, the deputy director of NC Gear, and GEAR stands for Government Efficiency And Reform. We were created last year in the budget and I will go through some of those details, but I wanted to point out that Christina Dorfhueber is leading the project from the Deloitte side, Deloitte is a consulting company that we hired, and she's here to answer the questions that I can't, but hopefully that's the only time that you have to hear from her. Hopefully I can answer everything appropriately and not stumble too much. I wanted to go into some of the why of NC GEAR before getting into some of the specific pieces. And you have handouts with you that have a lot of text on them that can help you understand what we're doing. I've chosen a slightly different way to present the information here in person. But this is using a program called Prezi, so this is still available online at any time that you want to use it in addition to the handouts that you have. I want to start with a quote form C.S. Lewis and he said that we all want progress, but progress means getting nearer to the place you want to be. If you're on the wrong road the man who turns back soonest is the most progressive man. And it's one of those things that we don't always want to acknowledge, but that sometimes we have to acknowledge and that's one of the reasons that NC GEAR was created. Because sometimes we don't event have the basic information to tell if we are on the right path or not. And so every few years we have to come back and take a look. Are we on the right path? Do we have the information that tells whether we're going in the right direction. Getting closer to the goals that we have for state government, for the agencies, for the programs that have been created along the way. And what becomes difficult when we don't have that basic information is what I saw in one of the books that my son is reading for school. It describes a company that, well, I'll just read it. It says "It's very easy to be blinded to the essential usefulness of some of these things by the sense of achievement you get from getting them to work at all." In other words, their fundamental design flaws are hidden by their superficial design flaws. There are things that you as state employees that working as one for the past 18 months, talking with folks throughout state government. One of the things that happens is that we're so excited when we get something to work the way that it's supposed to work that when we're done with it we say "Boy, that wasn't even the right thing." So, how do we get doing the right thing?

To compound that and to add one more piece to the difficulties that we face and why we have NC Gear is that we have some significant fiscal challenges and policy challenges facing the state. One of those is Medicaid as you all are a lot more than familiar with. One of those is the infrastructure that we have in the state, transportation, the state buildings and the IT infrastructure, making sure that those things work and are well funded and able to provide the services we need. What is our unfunded health and pension promises to future state retirees? That’s a large outstanding liability that we have. Then a fourth one is our reliance on federal funds and other receipts that are not as reliable as a source of funding, so with all of those things making governments reform essential. Last year Governor McCrory in his inaugural address said that we have an opportunity to transform our culture of government through a top to bottom assessment of efficiency, effectiveness, and customer service. The three words there are important because efficiency is that we’re getting somewhere fast, effectiveness is that we’re getting to the right place, and customer service is that we’re doing it in the right way. For those of us within state government we are also taxpayers and we want to make sure our money is being used properly as much as anybody else does. We are customers of each other within state government too. So when we run into bad customer service that effects how we’re able to ?? our jobs. We know that when we provide poor customer service that it affects the way that everybody across the state deals. We want to make sure that what we provide, the experience that we have with our taxpayers, with the people who come to our offices, is the best experience that we can be able to provide. That statement led to the budget last year and in the budget document you all provided a description of what NC Gear should do. This is the whole section that deals with us and it essentially asks us that without using the governor’s term of transform, we have quite an extensive mandate and we appreciate that. We’re asked to take a look at the statutory authority of the entire executive branch, that’s receipts supported agencies, that’s non state entities receiving state funds, entire departments, similar functions in multiple places throughout state government, taking a look at the statutory authority, the source of funding, the outcomes that are trying to be accomplished, the organization of state government, internally within a department and externally across departments, our relationship with local government and how we provide services. Then we were asked to take a look at opportunities for restructuring whether that’s combining things and three specific areas that we were asked to take a look at were human resources, information technology, and state purchasing operations and management. From the last three months of going around to state agencies and getting their feedback about where we should be looking, those were exactly three of the areas that we should be taking a look at. Those were needless to say some areas that we've heard a lot about. Our focus with all of this effort is not about making government bigger or smaller is about making it more effective. Again it’s providing the right service to the right person at the right time and if we can do it with good customer service that’s an added bonus and we want to be able to do that. In order to be able to do that work we have an RFP process, the legislation provided us with money for both years of the biennium and said to hire a contractor. We went through a competitive bidding process. We had an RFP that we issued in December. We received a number of responses to that. We went through those with a small committed that included Auditor Wood, included the state CIO Chris Estes, included the state Human Resource Director Neil Allan –

And included D. Jones from the department of administration and so Auditor Wood we thank you for your assistance with that, and it was extremely helpful given the direction of the legislation and the focus on HRIT purchasing. We needed to make sure we had those three groups covered in understanding that we could address those areas and then the auditors help was invaluable being able to understand where state government needed help outside those areas and how we should be taking look at the process of evaluating all of state government. And with that process again we had a number of bids. We went through best and final offers so that we could achieve a better direction on that and what we felt was better use of our funds than what was originally...that what we had originally been provided. And going through that process we chose the Lloyd based on their experience not only in North Carolina where they've worked with the state on a number of projects, worked with the chamber of commerce to take a quick look at where the state could improve last year at the end of 2012 and into early 2013. Have worked with Mecklenburg county. Christina ??? herself has done some of this similar work in Kentucky. The rest of the team has done work in Minnesota. They've worked in Wisconsin, they've worked with Canada, they've worked with a number of states in specific areas as well large agencies and university systems. So they provided a sense of an experience with what the rest of the country is doing and what they've seen work in other places that can combine with what we've been able to learn as state employees and working with the rest of state government about where we should be focusing. And the way that we've been working with them we brought them on in the beginning of April. And our team within the office of state budget management we formed in November, started bringing people on in November, and started taking a look at state government on our own in trying to get an understanding of where we should be focusing. And when we brought the Lloyd in we started going to individual agencies to get another sense, to get that ground work with them, to introduce the Lloyd to what our state agencies are doing. And to introduce the agencies to the NC Gear process a little bit more. And that started in April. We've met with just about every state agency and both cabinet and council of state. We've also met with some of the boards and specific offices in different places. We started that, again at the beginning of April that continued through this month. In addition this month we created a state wide assessment that gives us an understanding of the data and the information that's available in the state that we already know, that within state government, that we can be able to use to provide further direction in our analysis in helping us figure out what opportunities will actually provide, to borrow a phrase, enough juice for this squeeze. And we have that going on. And then we take a look, we do the evaluation based on what we've learned from agencies, what we've seen from this assessment and from what we've learned from speaking directly with state agencies. From what the Lloyd has learned in other places, from looking at the academic research and from the work of think tanks across the country and within North Carolina left and right about what we should be doing. We'll be going through that process and then we should have a report from them towards the end of September that we then incorporate into the budget process and what the governor would recommend. So this is the large picture of it and the yellow dots on this slide are some specific places where we interact again with state agencies to get validation about the ideas that we've been developing. We've been able to meet with some of the legislators as well on the way, to get your feedback and to make sure that we're going in the right direction and haven't missed anything in that area. So that's our current work right now is getting the participation...

Of everybody, and the importance of working with state agencies is making sure that, once we come up with brilliant ideas, obviously. Come up with good design for how those ideas should be implemented, convince you all that they are brilliant ideas and that they're well executed, and have you pass them in legislation next year. Then we have to go back to the agencies and make sure these get implemented. And that is a challenge in itself, is the implementation. As you all know, whether you're new here or have been here for 20 years, since the first GPAC report or any of the previous ones, that there are numerous opportunities for these things to fall apart. We've had a number of reports end up as great doorstops we've been told. Or look really nice on the bookshelf or really good on a desk- we're studying this. And given the fact that y'all over the last few years because of necessity with the state of the economy have taken care of all the easy things, that leaves us with a lot harder task in front of us. So we're really focusing on how do we get the ideas that we have implemented. As you may have noticed, there were a couple of ideas that we had incorporated into the governors budget proposal this year. And we're also working with state agencies already on some of the specific needs that they have. Whether that's consolidating leases and consolidating properties. Working together across agencies when they have specific programs that they should be coordinating, the state-wide assessment that I mentioned before, and we also have a website which is available now for state employees and for the general public to provide new ideas for us to take a look at. And I'll show you that website, it is ncgear.nc.gov, and as you can see we have a simple form, it's just explain your idea, tell us where you think it might fit, if it fits anywhere- if you don't know, tell us that too. We can probably figure than out. Who might benefit from it? Ask about the types of reforms that might be involved whether that's cost saving, improve customer service, policy regulation. And then for state employees we also ask if they have supporting documentation so that we can follow that up. Ask for name, email address, and ask to indicate if they're a state employee. In the state employee one, there's a program that's been relatively dormant, it's called NCthinks, but that's something that, after we adopt the idea, if we see something that's worthwhile, we will provide that as well to the NCthinks program, which is an evaluation after the fact to see the savings that were accomplished from an idea, and employees have been able to receive rewards from that in the past. So we're gonna pass those things along. In the coming months as we're going through the rest of that work, next month we will be conducting some ideation sessions. Ideation sessions, these are things where we'll be taking a look at kind of big-picture questions in a few specific areas. One is human resources. How do we, the processes that are involved in that, and the systems, the organization and how we handle total compensation, how we handle workers compensation, and other specific questions in that area. What is the infrastructure of the state? One is the connection as you all have been taking a look at it. Or time between education and the workforce, and the entire spectrum there. So those are four of the areas we will be taking a look at. Our IT infrastructure and the security of that. We'll be taking a look at something we call economic dynamism. And so how do we as a state interact with local governments and make sure that we have a strong, violent economy, in addition to incentives. So, those are some of the pieces that we have coming up. The report from DeLoy that has some of the evaluations and the recommendations should be to us by the end of September. We go through the budget process and our final report to

General Assembly is due in February of next year so that there should be plenty of time to work that into the rest of the legislative process. So, with that I look forward to your comments, your ideas, look forward to continuing to work with you and we appreciate again the opportunity to present today and to provide you some background on what we’ve been able to accomplish and what he hope to be able to accomplish through this process. Sir, Mr. Chairman. [SPEAKER CHANGES] Thank You Mr. Coletti and let me say just a couple of things before we get to questions. One, you mentioned [GPAC], there are only a couple of us here who remember [GPAC] and that was some time ago. For the folks who are here who don’t know [GPAC], the performance audit was done in 91-92. Lots of information came back. Lots of recommendations, very little activity one of which was to look at GPAC again in 10 years and it took 15 years to look at it again. With the [GPAC2] in about 06 and as a result of [GPAC2], actually this committee itself in this section of General Assembly was formed. So, I just as a matter of history to you because and it’s charged with ongoing review and I might add that it is our desire for NC GEAR and this committee to work together in some reasonable way as we go forward and in many ways and in conjunction with the auditor which we’ve already indicated. So, thank you for mentioning that. Okay. Let’s start with questions from the committee. Senator Tarte. [SPEAKER CHANGES] Thank You, Mr. Chair. Mr. Coletti, it’s always a pleasure to have you here and the folks from Deloitte. As a former partner at ?? and Deloitte, I have a deep appreciation for this, but looking at the work plan you’re one week away from starting to build your quick glance. Having done this, I’m guessing 80% of everything you know you’re gonna give us in September, you already know the answer to. And what I’d like you to do is share with us, if you can, some of the things you’re leaning towards that are top priorities now and the quick glance because I’ve been here an year and a half and I can go through a ?? of things from renegotiating the IT contract, from consolidating ERP platforms to archiving ?? paper. I’ve done a list of probably 20 things right here that can be significant. So, I’d love to know what the committee or the consultants think right now. [SPEAKER CHANGES] Because we’re still in process and we’ll be working with the agencies themselves so that the ?? will be things that the agencies are either working on or can be able to accomplish. Some of that will be things that they already have legislative authority to do and that’s what we’re looking at as ??. So, yes sir. [SPEAKER CHANGES] So you don’t wanna share? [SPEAKER CHANGES] Don’t have anything specific to share at this point with you, sir. [SPEAKER CHANGES] There will be more opportunities. [SPEAKER CHANGES] Plenty of opportunities. [SPEAKER CHANGES] Okay, because we meet once a month, whether we’re in session or not. Senator Hise. [SPEAKER CHANGES] What’s been the total state expenditure right now on NC GEAR and what are your requests that we currently have coming up in the budget for additional funding. [SPEAKER CHANGES] Within the budget was granted $4 million over the biennium. We have spent, thinking about combined, we’ve probably through about a million dollars. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Just second part of that and what are the additional request. I know that IT there was a request for an additional 2 million. I was trying to see where. [SPEAKER CHANGES] Of those pieces, yeah. The IT has 2 million dollars that it’s looking for with restructuring and with an ERP planning and that as far as I know is the only additional request that’s pending. [SPEAKER CHANGES] Excuse me, pending before you? [SPEAKER CHANGES] We may be incorporating some other IT work as well with a small addition as much as 100,000 dollars of additional funding on that side. But I believe that is already budgeted. [SPEAKER CHANGES] Representative Howard. [SPEAKER CHANGES] Thank you, Mr. Chairman. Thank you for coming in and being here. Could you.

I’m looking over the list of suggestions of… I’m assuming… are these the suggestion from the consultant, or…? [SPEAKER CHANGES] No ma’am. Actually, thank you for pointing that out. In April of this year, we did provide an interim report to the General Assembly, and what Madam Chair is looking at is an executive summary that we provided on one page that provides a brief of what we’re looking to accomplish, and on the back of that is a fairly small print list of what the cabinet agencies already had underway through 201. So what we looked at was knowing that this effort is building on the work of the rest of state government, through the things that you all have passed, through the work of program evaluation division, through the work of the auditor and through the work of the cabinet and the council of state agencies, and we chose to take a look at the cabinet agencies because we had a fairly set timeline there. They started in January of last year and we knew what things were new, whereas if we were taking a look at council of state, because they’d been around, in office for longer, they have a number of projects that are well-established and in development. So the list that you’re referring to, Representative Howard, is actually a list of projects that cabinet agencies had begun last year, and some of them were completed by the time we were writing about it, and some of them are still in progress. [SPEAKER CHANGES] Thank you because looking at the list, I just noticed for out of interest, Program Evaluation had made a recommendation to sell this helicopter years ago and of course it never happened. I don’t believe you’ve been able… you’re not going to sell it on eBay, I don’t believe. You might. I do have… [SPEAKER CHANGES] An additional question? [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] You’re recognized for a series. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] I’m confident there will be one. [SPEAKER CHANGES] There may be. Are we going to have a list of suggested savings that’s going to be done independently by the consultant to justify…? Four million dollars is a lot of money for the finance people, and we’re trying to determine that we’re going to get our money’s worth, so will there be a list of suggestions, and then tied to that list there’s going to be an actual dollar amount that would be anticipated that we would be saving if we had the strength to actually put it in place? [SPEAKER CHANGES] Yes ma’am. In the report there will be the recommendation and a dollar amount to go with that, and that’s one of the criteria that we’ll be using to evaluate things as well. We want to make sure who’s being impacted by changes, what the value of that is, and the time that it takes to implement. [SPEAKER CHANGES] If you don’t mind telling us, how much of the four million dollars… You said you’ve spend what, about one million so far? [SPEAKER CHANGES] Yes ma’am. [SPEAKER CHANGES] Could you tell us – maybe nobody else cares but those of us on Finance care – out of that one million dollars, how much has been paid to the consultant and how much has been used for the staff of NC Garrett? [SPEAKER CHANGES] Well ma’am, the staff of NC Garrett is composed of two permanent, fulltime members of OSBM who are working with us on this project in addition to some of their other duties, and three of us who are time-limited positions, tied strictly to NC Garrett, and we also have a temporary position, and so we’re relatively cheap as things go, and the consulting team has brought in a number of people to fill out our team, to provide the…

....technical background, the technical skills and the understanding of processes to be able to accomplish what we have to accomplish in the short time that we have. So the majority of that money has gone to them because there's a lot more of them and they're providing a number of services to us to fill us out. [SPEAKER CHANGES] Could you also tell us what's been done to minimize the administrative time and expense on the agencies and universities that with all the data submissions and the interviewing with staff? Do you have that under control? [SPEAKER CHANGES] We're working with agencies to not be too much of a burden upon them especially given that we recognize that our timing of requests while you all are in session is maybe not optimal. But what we asked them to do and one of the keys with the assessment is that it is truly an assessment of where we are, so we're asking them not to go through too much effort to re-create things, that if there is something that has been provided to a program evaluation, to the auditor, to another source, point us to that data source and we will use that. If there is, so we're doing everything that we can to minimize it and we recognize that no matter what we do it is going to be a burden and we appreciate everything that they're doing to assist us with this, we hope that when we're all done, that the product of what we accomplish with the agencies is more than worth the time and effort that everybody's been taking. [SPEAKER CHANGES] ?? Follow-up Mr. Chair [SPEAKER CHANGES] Follow-up [SPEAKER CHANGES] Is there anybody on the ?? team or ?? that has legislative drafting ?? quite often we get these nice ?? they're spiral-bound nice reports, color copy and they're filed in the library and that's the end of that. Is there anybody on your team or ?? team that literally has legislative drafting and implementation experience? [SPEAKER CHANGES] Well within the budget office we have our interaction with bill drafting and so we've been through the process and from the ?? team there are, do you all have former legislators? Yeah, they have former legislators and they've provided some model legislation to us in specific areas already so there is legislative language that goes with that and my previous experience as well I've drafted model legislation which is not exactly the same thing but yeah we have some drafting experience. [SPEAKER CHANGES] Who else is gonna be at the table other than your office and the consultant? Is anybody else gonna be at the table when you're drafting this legislation when the legislation's being developed? I mean, where's it gonna come from? [SPEAKER CHANGES] Well we'll be working with the governor's staff directly on anything that goes into legislation and anything that goes into the budget itself would go through the Office of State Budget and the rest of the governor's staff. [SPEAKER CHANGES] All right, thank you. [SPEAKER CHANGES] Representative Hurley [SPEAKER CHANGES] Thank you Mr. Chair. On page five you have put priority one agencies, was that because they're so big and there's so many questions about different things and will they all be going on at the same time? [SPEAKER CHANGES] They are all going on at the same time, again that's one of the reasons why we had to bring in an outside team is to help us be able to man all of these efforts that we're trying to accomplish. And priority one agencies yes, are based largely on size. We figured if we go through those we've got over half the budget and we can accomplish that. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Others? I don't have this in front, are you working with the court system or that structure in any fashion? [SPEAKER CHANGES] No sir we just are looking at the executive branch so neither legislature nor the court system. [SPEAKER CHANGES] Okay. What about, I mean, I know have you, have you completed a

Gram inventory we'd, they tried to do that and never got threw I'm just curious if there's a program inventory out there that has been identified or completed. [SPEAKER CHANGES] Well uh we are, one of the advantages that we have is that we are building on a structure that the offices state budget has been working with agencies on for a number of years called program budgeting and so we have uh some, some self identifying programs from uh, from every adjacency um we have not done the type of uh evaluation of those programs that that program evaluation would normally consider but we have a working list of programs. [SPEAKER CHANGES] Okay. uh senator Clark. [SPEAKER CHANGES] Um miss Clay, here it appears you guys are going to be pretty lie. [SPEAKER CHANGES] We've been pretty busy so far now we'll continue from base. [SPEAKER CHANGES] Prioritize opportunities, can you amplify that a little more about how exactly is that going to be done and who's involved. [SPEAKER CHANGES] Ya that is the work that we'll be doing uh taking a look at the the dollars that are involved. That's what we'll be at that what we. [SPEAKER CHANGES] Say we? Who is that? [SPEAKER CHANGES] Oh oh sorry sorry uh the those must on ends on NC Gear are state employees and and the Delore consulting team will be taking a look at these pieces uh and then we'll be the validation comes and working with the agencies themselves on these uh and we'll be asking for further uh input will be comparing notes on some of those things probably with program evaluation with the auditors office uh and others who have experience in those in those areas. [SPEAKER CHANGES] By chances the general assembly going to have any incite into this process or look into this process. [SPEAKER CHANGES] We would love to incite from Yelen and and and have meeting with anybody who uh who's who's in that in those areas so on IT questions we would like to get your feedback. [SPEAKER CHANGES] Okay others. um let okay. Starting to represent Howard [SPEAKER CHANGES] I wish I had more time I apologize uh for not having more time [SPEAKER CHANGES] We can always come back [SPEAKER CHANGES] No you don't want to do that [SPEAKER CHANGES] No Actually you'll have. I'm confident you'll have the opportunity. [SPEAKER CHANGES] Um i just want to be sure that I understand um the intern report the executive summary with the attachments and the thing that's in the actual report. Is it just a rehash in of things that are already in place? I don't I mean I'm not trying to bacher you but I I just don't see anything that grabs that grabs you, there's no new ideas that I see in here. Um was that the purpose of the intern report to rehash whats already in place or already being done or already being planned. [SPEAKER CHANGES] The purpose of the intern report was to provide you with a with a an idea of where we were going with our work uh let you know what we were able to accomplish which at that point was uh what was that the the uh significant accomplishment for us at that point uh learning the processes of contracting uh within state government was bringing on the consulting team to assist us with the rest of it and again to to put the our work in context yes we did want to point out how it builds on the work that's already being done and so that's that's were the existing pieces come in. [SPEAKER CHANGES] This one final comment [SPEAKER CHANGES] Yes mam [SPEAKER CHANGES] Uh have have we spent the last year and about a million dollars um getting everybody up to speed of whats already in place in North Carolina so you can move forward? [SPEAKER CHANGES] No mam. The the the money uh we we brought Deloitte on at the beginning of April uh so that there's the again the bulk of our money is is going is in the contract uhh as apposed to the the treat the those of us on staff uh within state government uh which is again about uh about uh four about four staff who are signed too NC Gear uh as NC Gear to who are with the OSBM who don't get.

… against our budget, as I’ve been able to tell by looking at the dollars, so the interim report was to give you an idea of what we were looking at and how we were going to accomplish that, and since then, bringing the Deloitte team on with their staff and working with the state agencies in an intensive manner starting in April. That’s where most of the money has been. [SPEAKER CHANGES] So when you bring your next report that, we’re going to see new material. Is that our anticipation, since…? [SPEAKER CHANGES] We anticipate that next February when we have our final report to you, that there’s the full set of recommendations that we receive from Deloitte, that we have a good indication of where we’re going with those as well, and the steps that have been able to be accomplished between now and then in some of those specific areas, the quick wins that Senator Tarte mentioned and a number of other areas. So that’s the reporting schedule that we have, is one in this February, one next February, and we’ll be doing a lot of work between now and then. [SPEAKER CHANGES] I say Senator Clark, but Senator Randleman, you look like you want to ask a question, and I want to recognize you to ask if you want to ask a question. [SPEAKER CHANGES] I really do not have a question but I am just overwhelmed with all of this. Thank you. [SPEAKER CHANGES] Senator Clark. [SPEAKER CHANGES] I guess I’m slightly confused. Did you mention a final report in February of 2013? [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] What is the difference between that final report and the final report that’s due on the end of September? [SPEAKER CHANGES] What is at the end of September is Deloitte’s report to us based on the work that we’ve done with them. From that point until February, from the legislation that was passed last year, there was a February report of this year and a February report next year, and the February report next year will incorporate their ideas and should be able to give you a sense of what we’ve been able to, as we’ve vetted that through the state agencies afterwards and with the Governor’s office, what we’ll be looking to get accomplished in the legislative session. [SPEAKER CHANGES] So you guys…? [SPEAKER CHANGES] We’ll be doing additional work after they leave, yes sir. [SPEAKER CHANGES] I’m trying to understand what it is you’re going to be doing between September and February. [SPEAKER CHANGES] That’s working through the budget process, seeing what other reorganization and how do we actually implement this, and working on that implementation with agencies. [SPEAKER CHANGES] Senator Hise. [SPEAKER CHANGES] And this may be more of just a comment than others, and I think you’ve heard where Chairman Howard and others’ questions have gone, what they’re looking for, kind of looking for that answer. When we sit here in February, if we get a report back that doesn’t have new directions that the legislature has not considered, new areas for potential consolidation and spending, savings that is a bold direction for this state, then whatever we spend, four to six million dollars, will have been a complete waste of money and it’ll find itself on another shelf, and so that’s what we’re asking for, that’s what we’re looking for – not a rehash of other things. I could not be more excited about the potential that exists here in this process, but I think we’re already starting to hear how this final report will be evaluated. [SPEAKER CHANGES] Yes sir. I realize yours was a statement and not looking for a response, but our intent is the Governor’s intent, and that’s why the language that he used in creating it in his inaugural was looking to transform state government, and so if next February you don’t get much from me, then I haven’t done my job, and yes, we’ve wasted everyone’s time and money, so I truly do not anticipate that at that point. This is an early request for us to come to you, which is right after while we’re still in the process of gathering information. We haven’t even gone into the next step, and so that’s why I haven’t been comfortable to provide any more explicit direction about where we’ll be going, because we still have to figure out which of these ideas that have been brought to us are worth pursuing and which ones will actually accomplish something, but I think everybody that we’ve spoken with within the agencies and across state government agrees with you that we’re here to not…

... have another set of doorstops and documents that sit on a shelf. [SPEAKER CHANGES] Let me ask, who will be assigned to assist state agencies with implementation of your recommendations? [SPEAKER CHANGES] I’m not sure that I understand the question, sir. [SPEAKER CHANGES] Well do you anticipate a technical assistance team associated with the recommendations that…? [SPEAKER CHANGES] Part of what will come from this is likely… maybe an executive version of Program Evaluation which would in that case include how do you examine things, how do you evaluate programs, how do you implement ideas and changes and provide technical expertise along the way? So that would be another piece that may come from this. [SPEAKER CHANGES] Is that technical assistance or whatever covered by the four million dollar appropriation? [SPEAKER CHANGES] I don’t believe so, sir. I believe it was covered by the legislation. [SPEAKER CHANGES] Representative Starnes, you had a question. [SPEAKER CHANGES] Thank you. Now it says you’re having information session with you’ve got 22 different agencies listed, but then you’ve got four of them that are denoted your priority one, so the recommendation that you’re going to bring back at the end of the year, is that going to be a recommendation on the 4 priority agencies or each of the 22 different agencies that you have listed? [SPEAKER CHANGES] We were gathering information from all of the agencies to deal with the statewide, enterprise-wide issues that we have in HR, in IT, in purchasing and other areas. Part of what came from those, there may be some specific things within those agencies. The priority one agencies, given their size, are ones that we want to make sure we take a close look at to see what we can accomplish with the departments to bring about some change in those areas. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] So the answer, 22 agencies or on the 4? [SPEAKER CHANGES] There will probably be somewhere in between. So we’ll be doing broadly across state enterprises and HR and IT and purchasing and the other back office functions that state government provides, and also to the extent that we find things within specific agencies, providing some recommendations in those areas on working with those agencies on how do we implement those. [SPEAKER CHANGES] Others? Senator Clark. [SPEAKER CHANGES] I have a quick question here. If you don’t mind, I’m going to steal the language of the Program Evaluation Division, and typically in their division, they provide what’s called a work plan, and I would like to think that what you’re going to provide in February, maybe we can call that a work plan. Now that being said, are you guys going to periodically provide us with some indication of the projects that have been completed, the projects that are underway and some sort of idea what is to come down the road over time? [SPEAKER CHANGES] One of the things that I did not mention but is in your handout that Deloitte is helping us establish is the results management organization, which is exactly that, to be able to track the progress with what we’re recommending, track the progress with things that are already ongoing, and provide the direction for future work. [SPEAKER CHANGES] I’m going to do something a little unusual. Our auditor has asked to ask a question, so since I understand that the two of you have worked together some already, I’m going to open the floor to the auditor to ask a question. [SPEAKER CHANGES] Actually my question was to the committee. I’m hearing the conversation about the final products and about rehashing things have happened, and I’ve also heard a lot of conversation about savings, and the question I wanted to ask of the committee, since I was a part of the committee that moved forward with this project and we chose Deloitte to help, I want to make sure that as bet I can, I can’t get involved in the weeds because I will be the one that turns around and audits all this stuff later on, so I won’t be in the weeds, but what I wanted to bring up and out based on…

...things I've been hearing. Is this committee going to be satisfied with recommendations that may not result in savings, but will allow agencies to do their job better? So therefore, you may not be able to tie down, and one of the things I think about is when I go out to do an audit, in a lot of cases, the agency doesn't have the data that can get me the audit that I need. It can't give me the information that I need. So if part of this project is basically providing the infrastructure or providing the processes where agencies now have to report costs. You talked about program inventories. Agencies don't even have an inventory. Agencies don't know the cost of those programs. And so will this committee be only looking for savings or are they looking for and be acceptable of recommendations that will allow agencies to do a better job of how they run their agency? [SPEAKER CHANGES] I'm not sure that, it's hard to answer a question for a committee. I know how I feel about it and I think that we would like both types of recommendations. I think that's appropriate to look at because in the long run, while it's hard to quantify, it seems to be that if we create the recommendations that create efficiencies in the long term they're better both for the clients and for the state itself. But that's my perception. I'm confident we'll have some further conversations in that regard, too. [SPEAKER CHANGES] Thank you, Mr. Chair. [SPEAKER CHANGES] Which does remind me of a couple things. We've got some very pressing problems and my question is, I mean you address the issue of retirement and the funding of accrued liabilities and such with retirement. Were there other very pressing problems we haven't...my question is, will this entity be looking at some of those very pressing problems? For instance, Medicaid costs. Do you anticipate reviewing and making recommendations there? Student tuition, making recommendations there or at least reviewing? And frankly, the state's infrastructure, the roads and the bridges, and water and sewer, or the utilities. I mean, do you anticipate making recommendations with regard to addressing...because you mentioned about state/local. Those kinds of very pressing and very real problems that we know we have. Do you anticipate moving in those directions? [SPEAKER CHANGES] We have talked with the different agencies on these specific questions, so what we end up recommending will depend on what the next steps are. On Medicaid and on other areas, it's always a question of how many people are looking at this and we've been going over in some areas with program evaluation division itself on what should we be taking a look at and what should you be taking a look at. How do we make sure that we're not stepping on each other toes too much along the way. But, yes. We will be taking a look at some of the pressing areas that we face and again, and that's why, Senator ??, HR, IT and the administrative aspects of it are the essential blocking and tackling. And that's why I gave the quote from the other book about the fundamental flaws being hidden by superficial flaws is that our systems, in may cases, are flawed in such a way that we can't provide the answers that we want to be able to tell whether we're doing the right thing or not. We're addressing the fundamental data issues, the fundamental structural issues and with that making sure that, to the extent that we can provide something useful, and not reiterate or rehash ground that somebody else has already taken a look at in those specific key areas. We will provide our ideas on those. [SPEAKER CHANGES] OK. Other questions from the committee? Representative Starnes. [SPEAKER CHANGES] Well, I think you have a worthy goal and it's something that we want to encourage you to be successful in. But I don't know how you're going to be...

… be able to complete this job with this scope in the amount of time you’re talking about. You’ve got 20… I believe there’s 22 different agencies here. If you did one every two weeks, I don’t know if you’d be able to get into the DPI in two weeks. I’ve been here 20 years and I couldn’t get into it, and so I know you’re well-intentioned, but you’ve heard the old saying “too big to fail”. I’m just wondering if it’s not too big to succeed. [SPEAKER CHANGES] I’ve heard that phrase before. [SPEAKER CHANGES] It looks like you could need to narrow your scope and try to look at one or two agencies and be successful, and the once you establish a pattern, you learn what you’re looking for, then you can expand it, but that’s just my opinion. I wish you all the luck in the world, but I’m just wondering if you’ll be able to do more than just a helicopter view of everything that you’ve got on the table. [SPEAKER CHANGES] That’s part of what we’re in the process of with narrowing down. So far we’ve been gathering the information, and again, the 22 agencies helped us understand on those statewide, on those enterprise-wide functions, that we wouldn’t want to have a solution that works for an agency like the Department of Public Instruction or the Department of Health and Human Services but that doesn’t work for, but that is too expensive for, the Department of Cultural Resources or the Secretary of State. Those are vastly different organizations, and so we wanted to make sure that we understood the needs and frustrations of the large agencies and the small agencies. That’s why we had to go out and talk to everybody. When it comes time to actually provide feedback and recommendations, our first step is doing exactly that, narrowing it down to what can we actually provide some information on and provide something useful on, and some of the questions that we’ll take a look at at the start are questions that we have the data, that they’ve been looked at numerous times before; we just need to take a look at them again to say “This had been looked at. Either it’s been considered a really good idea that just hasn’t happened, or we’ve looked at this again, all the existing data, and no, it’s really not worthwhile, which is why it hasn’t been done in the past.” So we agree with you that we’re not going to try to boil the ocean. That’s one of the phrases that we’re learned along the way. [SPEAKER CHANGES] And we still want to sell the helicopter. [SPEAKER CHANGES] That’s right. [SPEAKER CHANGES] Senator Clark? [SPEAKER CHANGES] Mr. Coletti, you mentioned the Results Management Office. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] When is that going to be established, anyway? [SPEAKER CHANGES] On the Deloitte side it’s already in place. That’s one of the functions that they’ve been able to bring to the table to assist us along the way. In September we will work to transition that from them to us. [SPEAKER CHANGES] Is that going to require additional government employees, or is that going to be absorbed by the current employees in the state government? [SPEAKER CHANGES] We’ll figure that out. I can’t answer that question? [SPEAKER CHANGES] Do you have any idea what this organization will look like? Two people, three people, four? [SPEAKER CHANGES] Honestly sir, we’re in the process of going through it, so to what it would look like, what it should look like, they may be two different answers in the future, and when we get to September we’ll have a better sense of what that would be. [SPEAKER CHANGES] Anything else? Anyone else with a question? One final comment. Mr. Coletti, on a personal level almost, I appreciate your coming and addressing us at this point in time, but I have a little pet project that I had Mr. Yates working on for some time and that’s called Wi-Fi on the state trains, which we’ve been trying to get since 2011. If you could just address that in a moment… The Amtrak, the through train, has Wi-Fi. The state trains that run from Raleigh to Charlotte do not, and this is getting ridiculous for this three-year delay, so if you would at least mention this to some folks because they have the money to do it; it’s just a matter of getting it installed, and I think it does have a very serious impact on the efficiency of the operation of the transportation of that unit, but that’s a pet project. [SPEAKER CHANGES] I did see the article on that, and one of the projects that we mentioned in the interim report was that we now have Wi-Fi…

… the fairies, so well ask the question. We’ll ask the question again. [SPEAKER CHANGES] Go figure. Do we have it on the helicopter. Thank you. [SPEAKER CHANGES] Thank you, sir. [SPEAKER CHANGES] Thank you, Mr. ??. Any other questions from anyone? Thank you immensely. [SPEAKER CHANGES] Appreciate it. [SPEAKER CHANGES] I would like to mention that our next meeting we currently plan for Wednesday July the 16th. There will be a couple of reports coming back at that point in time. I don’t recall which. Kiernan… [SPEAKER CHANGES] Child support. [SPEAKER CHANGES] Child support. Excellent, excellent. Unless there is some other comment, then I would suggest that this meeting is adjourned.