The concept of “Lean manufacturing” is one that has enjoyed popularity in the American business community for decades. Through a systematic focus on different kinds of waste, organizations seek to streamline their operations and deliver better results.
Advertisements
In recent years, the principles have been expanded to apply to non-manufacturing sectors such as governance. Ideally, a government agency that comes into compliance with Lean principles would be able to significantly reduce its expenses without any noticeable decline in the quality of its work.
State Rep. Frank Ryan, R-Palmyra, hopes to put these practices into place for Pennsylvania’s state government. A certified public accountant by trade, Ryan has worked with the office of Auditor General Eugene DePasquale to draw up House Bill 2209, which recently came up for consideration before the House State Government Committee.
The legislation would empower the auditor general to conduct a comprehensive audit of virtually every part of Pennsylvania’s executive branch. Those audit reports would be filed with the House and Senate Appropriations committees and with the majority and minority leaders in each chamber. At that point, lawmakers could compel agencies found to have significant levels of waste to reform their practices in line with the Lean principles.
Advertisements
Ryan’s bill picked up an amendment in the State Government Committee from Rep. Seth Grove, R-York, that adds another good governance provision. Grove’s concern was that once savings have been realized, the state hasn’t always done a good job of using the saved funds wisely.
“This actually came out of a conversation I had with [former] Governor [Tom] Ridge’s budget secretary a few years ago,” Grove said. “We were discussing cost savings within state government. Every governor has left some kind of cost savings initiative throughout their administration, and we were discussing what they did with their cost savings. The budget secretary actually brought up the fact that when he went back to the secretaries about their cost savings when they were getting ready to put their budget together, the secretaries basically said they spent all the savings and that they were gone.”
Advertisements
To prevent such savings from being redirected by agency heads, Grove’s amendment requires notification to the Office of the Budget and the Legislature when savings are realized through Lean processes, and then those savings are to be deposited into the state’s “rainy day” reserve fund.
While Grove’s amendment passed without opposition, Ryan’s underlying bill attracted criticism from the committee minority. Minority Chairman Matthew Bradford, D-Norristown, suggested that HB2209 might do more harm than good to the state’s finances.
“I just want to point out, I know these are all well meaning, and I love Representative Ryan’s eagerness to run for auditor general one day,” Bradford said. “I mean that from a good place, but sincerely, I just think we do have to pay for some of these layers of bureaucracy. And I realize some of them are costs, hopefully they’ll save enough to pay for themselves, … but I do think it’s important to be cognizant of that none of this comes without some cost.”
Advertisements
But Ryan noted that there were provisions in the bill that state if the audit program was not producing savings, lawmakers would have opportunities to step in.
“If at any point in time the Legislature felt that these [audits] were not producing the results that were desired after a period of time, they would not be funded accordingly,” he said. “But as such, we recognize there’s definitely a cost consideration to this. And that would have to be funds that would be appropriated in the process.”
Advertisements
After Ryan pointed out that the governor’s office was already making some moves in the direction of increasing efficiencies of state agencies, Rep. Mary Jo Daley, D-Conshohocken, questioned why lawmakers needed to get involved.
“My concern is that the Legislature is telling the administration how to do their work,” she said. “And I understand that some people may think that that’s what we should be doing. I actually think that we have three branches of government, and that there’s a separation of powers, and so I’m going to vote against this, although I like the idea that we’re doing something like this to work more efficiently.”
Advertisements
Rep. Cris Dush, R-Brookville, told the committee that he had personally seen the positive effects of Lean principles before he joined government, and that he had witnessed it generating significant savings.
“The industry started out with this several years ago, it’s become an industry standard,” he said. “The federal government started implementing it a few years back, the Air Force Special Operations Command, the reason I was actually aware of it, is because my unit actually sent people for the certification and the training, and immediately we started seeing some results.”
Advertisements
He further pointed out that eliminating waste in a department like Health and Human Services could allow for service improvements for the beneficiaries of its programs.
House Bill 2209 was advanced on a 15-10 party line vote and is now pending before the House Rules Committee.
