This morning I read an interesting report from IBM, Smarter, Faster, Cheaper, An Operations Efficiency Benchmarking Study of 100 American Cities. IBM provides a bleak report of local governments in the introduction, the authors state:
According to the Government Accountability Office (GAO), local governments in the United States are collectively facing a $225 billion structural budget deficit, which constitutes about 12% of their total spending. Since these are structural deficits, they will not diminish even when the economy starts expanding again. These shortfalls represent a fundamental disconnect between the spending commitments city governments have made and the level of revenue growth they can reasonably expect to achieve.
As a consequence of these structural deficits, each year local governments must find a combination of new revenues and spending reductions to close the gap in their budgets. Since 2006 local governments have shed 353,000 jobs, including teachers, police officers and fire fighters. They have furloughed employees, refinanced pension obligations, and spent down reserve funds in order to minimize service reductions.
This was a really interesting study put together from IBM. One of the big take-away is the management impact. IBM found that management is one of the big keys for efficiency in local government. This makes perfect sense, the kind of services that management decides to provide has the biggest impact on efficiency. Knowing what kind of services are needed by citizens and what the appropriate level is critical to efficiency gains.
The question that develops for me is that if management is so key, how are local governments able to effectively train managers and employees, equip them with the right resources and technology in a time of such tight budgets?
Check out the report:
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