Nevada controller revives legislation to create ‘charter agencies’ to spark innovation

CARSON CITY — Republican state Controller Ron Knecht wants to free government agencies from bureaucratic binds by authorizing creation of “charter agencies” to provide cost savings to taxpayers.

Similar in concept to “charter schools,” the proposal would give the governor authority to designate any department within the executive branch as a charter agency. That would give agency officials flexibility to operate outside certain personnel and budget rules in an effort to more efficiently deliver services to constituents.

The bill also would create financial incentives for agency officials and employees if they surpass performance goals.

Senate Bill 4 is sponsored by Knecht’s office for consideration during the upcoming 2017 legislative session. Republican Gov. Brian Sandoval does not generally comment on legislative proposals.

But with Democrats now in control of both houses of the Legislature, passage of the bill seems a long shot. A similar measure failed last year when Republicans were in charge of both chambers, failing to get out of the Assembly, where it was introduced.

Assistant Controller Geoffrey Lawrence said the bill’s goal is “changing the way agencies are run if an agency elects to participate. The motivation is about changing the incentive structure that exists within the bureaucracy … so people are focused more on delivering services at low cost.”

Under the bill, the governor and director of a charter agency would write up a performance agreement outlining goals to be achieved in the next fiscal year.

All employees in the agency would be moved to “unclassified” status, meaning they would serve at the pleasure of their boss and probably be exempt from personnel rules involving step increases in salary. The changes wouldn’t take effect until a year after a charter designation is made. State workers do not have collective bargaining rights, and union contracts would not be an issue.

A charter agency would receive no more than 95 percent of the general fund appropriations it received in the prior year. In return, it would not be bound by laws governing state purchasing or maintenance services and could seeks waivers of regulations that impede its ability to operate more efficiently.

The “carrot” for cutting expenses is authorization to keep 50 percent of any unspent state funds. A director who meets performance goals could be authorized by the governor to receive a bonus of up to 15 percent of annual salary. Likewise, the director could give similar bonuses to employees.

IOWA MODEL

Former Republican Assemblyman Stephen Silberkraus, who was defeated in the Nov. 8 election by Democrat Lesley Cohen, carried similar legislation in the 2015 session.

His bill was modeled after an experiment last decade in Iowa supported by then-Gov. Thomas Vilsack, a Democrat, but scrapped by his successor. Since 2009 Vilsack has served as U.S. Secretary of Agriculture in the Obama administration.

The charter program won national recognition, receiving the Innovations in American Government Award from Harvard University and the Innovation Award from the Council of State Governments.

Silberkraus believed his legislation would similarly allow Nevada’s agencies to find new efficiencies.

“Charter agencies will be given greater flexibility as an incentive to better deliver public services in a results-oriented way,” he testified last year before the Assembly Government Affairs Committee. “In exchange for increased benefits of flexibility and authority, charter agencies will accept the charge to find better ways to meet citizens’ needs, to be accountable for those results, and to reduce costs and generate more revenue.”

The six Iowa agencies that were part of the pilot program had a goal of achieving $15 million in annual savings. Jim Chrisinger, who was on Vilsack’s staff, said the savings exceeded expectations.

But a 100-page report released in 2011 by the Iowa state auditor disputed those assertions, finding that increased revenue from the Iowa lottery contributed to the higher funding, not the charter initiative.

“Therefore, it does not appear the … charter agencies met the $15 million target in any year,” the audit concluded.

Assemblywoman Dina Neal, D-North Las Vegas, pointed to the audit when the Nevada proposal was discussed last session.

“Why would we adopt a failed policy from another state?” she asked. Neal will serve as vice chair of the Assembly Government Affairs Committee in the upcoming session. In 2015, that committee referred Assembly Bill 104 without recommendation to Ways and Means, where it died without a further hearing.

Political headwinds aside, Knecht and Lawrence hope lawmakers will give it a second look when the 2017 session convenes in February.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-461-3821. Follow @SandraChereb on Twitter.