11

Unnatural Acts:Unnatural Acts:Managing for Results…Managing for Results…Even If No One CaresEven If No One Cares

Indiana Governor Mitch DanielsIndiana Governor Mitch Daniels

October 12, 2007October 12, 2007

22

Major InitiativesMajor Initiatives

Balanced BudgetBalanced Budget Funded Infrastructure ShortfallFunded Infrastructure Shortfall

Major MovesMajor Moves Indiana’s Economic RevitalizationIndiana’s Economic Revitalization Hoosier Homegrown EnergyHoosier Homegrown Energy Telecommunications DeregulationTelecommunications Deregulation Health Coverage for the UninsuredHealth Coverage for the Uninsured

33

Controlling Annual Controlling Annual Expenditure GrowthExpenditure Growth

2.81%

1.90%2.67%

5.88%

0%

1%

2%

3%

4%

5%

6%

7%

1996-2004 2005 2006 2007

Fiscal Year

44

From Deficits…From Deficits…

-$1,500.0

-$1,000.0

-$500.0

$0.0

$500.0

$1,000.0

FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Fiscal Year

Re

ven

ue

- E

xpen

dit

ure

s (

in m

illio

ns)

55

……to Surplusesto Surpluses

-$1,500.0

-$1,000.0

-$500.0

$0.0

$500.0

$1,000.0

FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007

Fiscal Year

Re

ven

ue

- E

xpen

dit

ure

s (i

n m

illio

ns)

66

Growing Cash SurplusGrowing Cash Surplus(Cash Balance – Liabilities)(Cash Balance – Liabilities)

-$400.0

-$200.0

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

2001 2002 2003 2004 2005 2006 2007

Fiscal Year

Ne

t S

urp

lus

(in

mil

lio

ns

)

77

Major Moves: Fully funded, 10-year Major Moves: Fully funded, 10-year transportation infrastructure plantransportation infrastructure plan

88

Indiana’s Economic RevitalizationIndiana’s Economic Revitalization

Indiana ranks #1 in Indiana ranks #1 in foreign direct foreign direct investmentinvestment

Personal earnings Personal earnings outpaced the nation outpaced the nation the past 2 quartersthe past 2 quarters

Unemployment Unemployment lowest in region lowest in region and down full point and down full point since 2005since 2005

99

Unemployment – NationUnemployment – Nation(July 2007)(July 2007)

1100

Indiana Biofuel: 2005Indiana Biofuel: 2005

Operating/ Under Construction Capacity

(MM Gallons)

100

0

200

400

600

800

1000

1200

2005

Ethanol Biodiesel

1111

Indiana Biofuel: 2007Indiana Biofuel: 2007

Total Capacity (MM Gallons)

100

1518

0108

-50150350550750950

115013501550

2005 2007

Ethanol Biodiesel

2008Production Goal

of 1 Billion Gallons

Already Achieved!

Clean Coal

1122

Telecommunications DeregulationTelecommunications Deregulation

One-step, statewide franchisingOne-step, statewide franchising Expanded broadband access to 102 new Expanded broadband access to 102 new

rural communitiesrural communitiesInvestmentInvestment New JobsNew Jobs

AT&TAT&T $250 million$250 million 1,5001,500 VerizonVerizon $100 million$100 million 300300 ComcastComcast 225225 EmbarqEmbarq $18 million$18 million Small telcosSmall telcos $65 million$65 million

TotalTotal $433 million$433 million 2,0252,025

1133

Health Coverage for the UninsuredHealth Coverage for the Uninsured

Market-based program that will cover Market-based program that will cover 130,000 of Indiana’s chronically uninsured130,000 of Indiana’s chronically uninsured

Not an entitlementNot an entitlement No employer mandatesNo employer mandates Individual accounts and preventive careIndividual accounts and preventive care Dedicated funding from cigarette taxDedicated funding from cigarette tax

1144

Managing for ResultsManaging for Results

CentralizationCentralization Competitive SourcingCompetitive Sourcing Everyday ManagementEveryday Management

1155

CentralizationCentralization

IT ConsolidationIT Consolidation ProcurementProcurement

One IndianaOne Indiana Buy IndianaBuy Indiana

Asset ManagementAsset Management

1166

IT ConsolidationIT Consolidation

Savings of $14 million annuallySavings of $14 million annually IT operations staffing reduced from 360 statewide IT operations staffing reduced from 360 statewide

to 190 within new Office of Technologyto 190 within new Office of Technology

1177

One IndianaOne Indiana

Estimated annual savings exceed $50 million Estimated annual savings exceed $50 million with total savings projected to exceed $200 with total savings projected to exceed $200 million to state and local governmentsmillion to state and local governments

BeforeBefore AfterAfter Hearing AidsHearing Aids $1,800$1,800 $900$900 Desktop PC’sDesktop PC’s $977$977 $690$690 Public Safety RadiosPublic Safety Radios $3,828$3,828 $2,250$2,250 Cell Phones (per mo.)Cell Phones (per mo.) $52$52 $32$32 AA BatteriesAA Batteries $1.61$1.61 $0.89$0.89 StaplersStaplers $6.02$6.02 $0.96$0.96

1188

Buy IndianaBuy Indiana

60%

73%

76%

81% 81%

84% 84%

55%

60%

65%

70%

75%

80%

85%

2004(estimated)

Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07

1199

Asset ManagementAsset Management

VehiclesVehicles Identified and sold over 2,000 unneeded cars & trucksIdentified and sold over 2,000 unneeded cars & trucks

AircraftAircraft Reduced the state’s under-utilized aircraft fleet from Reduced the state’s under-utilized aircraft fleet from

20 to 12 20 to 12 Leases for State OfficesLeases for State Offices

Saving 20% on new leases compared to previous Saving 20% on new leases compared to previous ratesrates

Surplus Real EstateSurplus Real Estate Sales to date: 33 properties, $6 millionSales to date: 33 properties, $6 million

2200

Competitive SourcingCompetitive Sourcing

SavingsSavings

PrisonPrison Food ServicesFood Services $11 million / year$11 million / year

Printing & MailingPrinting & Mailing $8 million / year$8 million / year

Prison ManagementPrison Management $3 million / year$3 million / year

Janitorial ServicesJanitorial Services $500,000 / year$500,000 / year

Welfare AdministrationWelfare Administration $1 billion over 10 $1 billion over 10 yearsyears

2211

Competition Works Both WaysCompetition Works Both Ways

Competitive Contracts Awarded to State Competitive Contracts Awarded to State EmployeesEmployees Logansport Hospital: Food ServicesLogansport Hospital: Food Services Department of Correction: CommunityDepartment of Correction: Community

Re-Entry CentersRe-Entry Centers

2222

Increased Employment in Critical AreasIncreased Employment in Critical Areas

Child Welfare Child Welfare CaseworkersCaseworkers Goal to reduce Goal to reduce

caseloadscaseloads

State PoliceState Police Excise PoliceExcise Police

Number of Case Managers

0

200

400

600

800

1000

1200

1400

Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07

2233

Everyday ManagementEveryday Management

2244

Bureau of Motor VehiclesBureau of Motor Vehicles

Average visit time Average visit time down from over 40 down from over 40 minutes to 10 minutesminutes to 10 minutes

Customer Satisfaction Customer Satisfaction survey rating up from survey rating up from under 80% to 95%under 80% to 95%

2255

BMV WebsiteBMV Website

2266

Department of Child ServicesDepartment of Child Services

Percentage of Current Percentage of Current Child Support CollectionsChild Support Collections

50.0%

51.0%

52.0%

53.0%

54.0%

55.0%

56.0%

FFY 04 FFY 05 FFY 06 FFY 07

2277

Public Employees Retirement FundPublic Employees Retirement Fund

Percent of Retirements without Payment Percent of Retirements without Payment Interruption (first check within 30 days)Interruption (first check within 30 days)

NotMeasured

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004-05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07

2288

Department of RevenueDepartment of Revenue

Percentage of Personal Tax Refunds Percentage of Personal Tax Refunds processed within 15 daysprocessed within 15 days

55%

60%

65%

70%

75%

80%

2004 2005 2006 2007

2299

Department of Environmental Department of Environmental ManagementManagement

Total Water Permit Backlog Total Water Permit Backlog (in Permit-Days)(in Permit-Days)

3300

Meth-Free Indiana InitiativeMeth-Free Indiana Initiative

Drug Lab Seizures & ArrestsDrug Lab Seizures & Arrests

0

200

400

600

800

1000

1200

Jul 04 - Jun 05 Jul 05 - Jun 06 Jul 06 - Jun 07

Seizures

Arrests

3311

Traffic SafetyTraffic Safety

Increased enforcement has led to a Increased enforcement has led to a decrease in traffic fatalitiesdecrease in traffic fatalities

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

360,000

2004 2005 2006

820

840

860

880

900

920

940

960

Traffic ArrestsWarningsTraffic Fatalities

3322

Program Performance EvaluationProgram Performance Evaluation

P.R.O.B.E. process – Program Results: P.R.O.B.E. process – Program Results: Outcome-Based EvaluationOutcome-Based Evaluation OMB evaluated 420 government programsOMB evaluated 420 government programs

Made more than 200 recommendations on Made more than 200 recommendations on how government could improve performancehow government could improve performance

3333

Pay-for-PerformancePay-for-Performance

Annual Salary AdjustmentsAnnual Salary Adjustments

10%

4%

0%0% 0%

2% 2% 2%

4.2%

0%

2%

4%

6%

8%

10%

12%

2002 2003 2004 2005 2006 2007

Exceeds Expectations

Meets Expectations

Does Not Meet Expectations

Average

3344

What We’ve LearnedWhat We’ve Learned

Progress starts with dataProgress starts with data What gets measured, gets doneWhat gets measured, gets done

Set the bar highSet the bar high Align incentivesAlign incentives

Reward employees financially for their Reward employees financially for their performanceperformance

Recognition by leadership, and make it visible Recognition by leadership, and make it visible to other state employeesto other state employees

Move fastMove fast Ask for forgiveness, not permissionAsk for forgiveness, not permission