Governor Florio’s Management Review Commission (GMRC)
Governors often enter office promising to reform government by eliminating waste and operating more efficiently. Attempts to fulfill this promise can take many forms. For Governor Florio, the first step lay in establishing a new commission—the Governor’s Management Review Commission (GMRC)—that would, with the help of pro bono work from the private sector, undertake an operational audit of the entire state government. The Commission, which faced a number of obstacles along the way—among them differentiating itself from previous previous similar efforts and determining a public/private relationship that would be functional—also had many successes. While no one favors waste or inefficiency, efforts such as the GMRC are often forgotten, first as their recommendations inevitably come to sound bureaucratic and then as future administrations take office promising management reform efforts of their own. Nevertheless, it is worth chronicling the challenges and successes of the GMRC and similar agencies, as well as other management initiatives, to find lessons that may be instructive to future leaders seeking a good path to improve government operations.
In addition to the timeline below, an Eagleton Center on the American Governor interview with Executive Director Michael Scheiring is available in the Video Library. Documents related to the commission’s work can be found in the documents archive.
Congressman James J. Florio, Democratic candidate for Governor of New Jersey, indicates in a campaign interview in the Star-Ledger that if elected he would institute “a thorough, analytical review of the state’s operations” as a means of controlling the state budget. Florio refers to the Cahill Commission as a model.
Florio campaign advisors Carl Van Horn, David Applebaum and Scott Weiner send to fellow campaign staff member Steven Perskie a detailed framework including budget, preliminary timeline, objectives, and structure for conducting the type of state audit Congressman Florio suggested in his campaign. They recommend a “private, non-profit organization” and emphasize that the audit would not be an all-encompassing budget solution, but should instead be presented as a “long-term effort to get control of state government and get the entire government to think about saving money and managing things better.” They also state that it should be a “collaborative process run by the executive branch with input from the business community.”
Tim Carden, former Cabinet Secretary to Governor Brendan Byrne and Commissioner of the Department of Human Services, sends a Memorandum to Congressman Florio also recommending a structure and methodology for the promised audit. Carden suggests that professional accounting and management consultant firms be used only for “specific projects appropriate to their technical capabilities” and that the overall effort be guided by a “volunteer group of knowledgeable citizens appointed by [Florio].” Carden also emphasizes that the timetable should be short and the agenda be focused and offers his assistance.
Congressman Florio is elected Governor of New Jersey, defeating Republican Congressman James Courter by a 62-38% margin.
Michael Scheiring prepares a proposed preliminary timetable for Phase I of what was then called the Governor’s External Management Review Commission.
A Star-Ledger article outlines the goals of the audit in the context of the state’s economic condition. The article notes that the audit will examine both where money is being spent and whether it is being spent wisely and that Governor-Elect Florio had consulted with former Governor William Cahill. Florio intends to structure the audit based on Cahill’s Governor’s Management Commission.
The final structure of the audit begins to take shape as transition team members David Applebaum and Carl Van Horn send a memorandum to Governor-Elect Florio laying out a plan in which Phase I of the audit (which was to focus on fast-moving departmental reviews) would be combined with Phase II (a more in-depth, comprehensive audit) . They envision beginning the entire process in late January.
Robert Goertz makes a number of suggestions to Carl Van Horn concerning the audit, most notably suggesting that “the single most critical factor influencing the success of the reforms will be the tone set by the Governor.”
Michael Scheiring, based on numbers obtained from Robert Goertz, presents Applebaum, Van Horn, and Scott Weiner with a proposed staff budget for the Commission.
Applebaum and Van Horn draft a memorandum for Governor-elect Florio suggesting the use of private financing for the Commission and indicating that they would like to ask Michael Scheiring to manage the process.
James J. Florio is inaugurated as the 49th Governor of the State of New Jersey.
The Office of Management and Budget issues new spending controls for all state departments and agencies, superseding prior controls.
Goertz provides Scheiring with a proposed two-phase approach to the audit, with Phase I comprising a survey of all state government and Phase II consisting of the operational audit itself.
Now Executive Assistant to the Governor, David Applebaum and newly-appointed Director of Policy Carl Van Horn draft a detailed memorandum to the Governor outlining the latest suggestions for the structure, staffing, and format of the audit. They suggest a “scaled-back version of the operational review audit” that will make use of loaned executives and existing OMB and Governor’s Office personnel. They also suggest candidates to be members of the Commission and a timeline for the Commission’s work.
Scheiring updates Applebaum and Van Horn on the agenda for the first GMRC meeting and indicates his approval of the proposed executive order.
Scheiring provides Applebaum and Van Horn background information on New Jersey’s state budget versus other states and suggests a response as to how the GMRC will differ from Governor Thomas Kean’s Governor’s Management Improvement Program (GMIP).
Governor Florio issues a press release officially naming the executive board of the Governor’s Management Review Commission (GMRC), “which will help fulfill his campaign commitment to identify and eliminate wasteful spending.” Named to the board are: former Governor William T. Cahill; former Chancellor of Seton Hall University Dr. John Petillo; Rutgers Professor Gloria Bonilla-Santiago; President of Restaurant Associates Martin Brody; President and CEO of PSE&G James Ferland; and lawyer and former Public Advocate Stanley Van Ness.
Scheiring sends Applebaum and Van Horn a detailed outline of “what is required to meet the objectives as publicly defined for the Commission.”
The Commission creates a slide show presentation describing its structure and proposed work.
Governor Florio issues Executive Order No. 7, officially establishing the Governor’s Management Review Commission.
Scheiring drafts a Memorandum to Treasurer Douglas Berman that includes a draft work plan covering two areas of focus: cross-cutting issues and department reviews of targeted areas.
The Commission creates numerous work plans, staffing charts, and schedules for analysis for each of the cross-cutting issues within the Commission’s purview, and begins the individual reviews.
Scheiring writes to Richard Keevey, new Director of OMB, requesting a focused overview on the following Departments: Commerce, Banking, Community Affairs, Corrections, Environmental Protection, Health, Human Services, Law and Public Safety, Transportation, and Higher Education.
Scheiring provides Berman with a detailed project work plan with anticipated completion dates.
The Commission completes and reports Operational Reviews of numerous cross-cutting issues and departments.
Scheiring sends Chief of Staff Joseph Salema a list of recommendations coming out of the completed audits on cross-cutting issues. He urges Salema to consider public release of the Commission’s recommendations.
Scheiring sends a memorandum to Salema presenting the Commission’s recommended options for restructuring State departments.
On behalf of the Commission, Scheiring responds to proposals developed by the Communications Workers union regarding alternatives to service cuts and proposed layoffs. He indicates that “many of these proposals have been reviewed and recommended to the Governor or are currently being reviewed” by the Commission.
Scheiring compiles and sends to the Governor’s team an extensive list of “immediate cost savings items that were developed from the audit reports completed to date.”
Scheiring drafts suggested remarks concerning the audit for inclusion in the Governor’s annual message and sends them to Director of Communications Jon Shure. The remarks include “a call for the Governor to announce the continuation of the Commission to complete the audit of the remaining eight departments that have not been reviewed.”
Scheiring reports to the Governor’s team that OMB has completed an analysis of the savings identified through the audit. Scheiring writes that of the “$316 million of short-term potential savings identified in the operational reports completed by the Commission to date, OMB has identified $70 million of savings that they have incorporated into the FY 1992 budget.” OMB also identified another $140.5 million of potential savings which require decisions or actions by the administration.
Scheiring drafts a memorandum concerning the funding of the next phase of the audit efforts, including setting out a potential budget.
Scheiring provides GMRC Chairman Stanley Van Ness with an extensive status report on the outcomes of the audits that have been completed.
In Governor Florio’s first State of the State speech, he references the “Audit Commission,” stating that he has accepted the Commission’s recommendation “to end the car inspection system as it now exists.”
Scheiring presents Salema with the results of the Commission’s review of over 400 boards, commissions and advisory bodies, recommending the elimination of 97 of those bodies and the consolidation of 50 boards, commissions and advisory bodies, representing a 38% reduction in all existing bodies.
In his annual Budget Address, Governor Florio introduces and applauds the members of the GMRC. He notes that the Commission has already identified $265 million in savings and confirms that he’ll expand the audit to cover the eight remaining departments. He also begins to announce his departmental reorganization plan.
A letter from Salema indicates that Governor Florio will request $1 million in funding as part of his FY 1992 budget request to continue the audit efforts.
Scheiring requests of Salema that the Governor support the Commission’s work at an upcoming Cabinet meeting by stressing the importance of the Commission and the need for the departments to focus on implementing the Commission’s recommendations. Scheiring also alerts Salema to some specific concerns that might arise from various departments.
The Senate Forum on Budget and Revenue Alternatives, appointed by Senate President John A. Lynch, presents its report analyzing “the general management structure of the State government fiscal affairs and making observations and suggestions as deemed appropriate.”
The Commission creates a “road show” presentation to take to local communities that briefly discusses the history of the audit process, the results, and the budgetary savings that have come from the process as of the 1992 FY State Budget.
The Republican Party responds to the Commission’s work by providing an assessment of the GMRC reports via the Republican Policy Committee Corporate Advisory Board on Government Efficiency. The report is titled “State Government Efficiency Issues: An Assessment of 10 Governor’s Management Review Commission Reports” and provides analysis of and responses to specific GMRC reports and recommendations.
The Star-Ledger begins a multi-day Special Report series analyzing the results of the audit and the recommendations made by the Commission. The article gives examples of the more than 400 observations and recommendations made by the Commission and notes that the potential savings could equal $965 million. The series goes on, over the next five days, to analyze various specific issues considered by the Commission.
The Assembly Republicans release a statement in conjunction with the Corporate Advisory Board Report criticizing the GMRC’s work for being superficial and not providing for “true programmatic review or cost-benefit analysis.”
The Asbury Park Press breaks down the results of the audit by department, with a focus on Republican criticism of the effort.
Herb Jaffe of the Star-Ledger writes a column discussing the audit, particularly comparing it to the Cahill Commission. Jaffe focuses on ideas to secure the future of the audit, noting that the report from the Cahill Commission “was eventually stuck away on the same shelf as similar reports from previous governors, eventually to be joined by the inefficiency and waste reports of subsequent governors.”
The Commission publishes “The State Audit,” a detailed breakdown of the results of the audit for each department as of August 1991. This would become an annual report.
The Star-Ledger reports that Governor Florio “has notified all department heads that he expects them to follow recommendations” of the commission and that recommendations already in place “are producing savings of $248 million under the current budget.” The article also breaks down the savings by department and issue.
The Commission begins discussing recommendations for the Governor on institutionalizing the audit to make it a permanent part of the state government.
A memorandum from Scheiring to Applebaum and Van Horn indicates that the Department of the Treasury is the “only department that has not complied with the Commission’s request to provide a status report on its efforts to implement the audit’s recommendations.”
Scheiring provides Van Horn and Chief of Management and Planning Brenda Bacon with draft legislation that would institutionalize the audit and create a Sate Management Audit Commission “to undertake performance audits and organizational reviews of state departments and programs.”
Senate President Lynch sends the May 1991 Senate Forum on Budget and Revenue Alternatives Report to the New Jersey Chamber of Commerce.
The Commission drafts a letter to Governor Florio with recommendations for establishing a “permanent performance management audit function within state government.”
New Jersey Municipalities Magazine publishes an article on the audit and its results.
In his annual Budget Address, Governor Florio notes that the Commission has recommended “hundreds of cost-saving measures that have already saved New Jersey $250 million,” specifically listing cutting down on state cars, phones, and expense accounts. Governor Florio indicates that “we’re going to make the Commission permanent and accountability will be institutionalized,” listing a number of specific measures the Commission will spearhead.
Scheiring sends Salema a Memorandum summarizing in list format the GMRC’s privatization recommendations.
A Courier-Post article reports on the results of the audit, emphasizing that it is an operational audit rather than a financial audit and indicating that the “Where’s the Audit?” pins that had been popular early in Governor Florio’s term had been at least partially answered.
The Office of Legislative Services, in its analysis of the fiscal year 1992-1993 New Jersey budget, issues a summary of the estimated potential savings opportunities identified by the GMRC, also indicating which were implemented in the 1991-1992 fiscal year.
Scheiring, Associate Executive Director Steven Clark, and Charles Ardman, Director of Health Care Management with Prudential Insurance Company, testify in front of the Assembly Select Committee on Civil Service and Employee Benefits concerning the audit generally and on the Commission’s efforts on human resource management specifically.
A Courier-Post article reporting on a surprise agreement between the State and the Communications Workers of America cites the audit as “the specter that forced the CWA to settle.”
A lengthy Star-Ledger article examines the results of the audit and lists a number of legislative “Bills in limbo” that would act on GMRC recommendations and save more than $600 million.
A Star-Ledger article concerning proposed GOP budget cuts quotes GMRC chairman Stanley Van Ness. Van Ness criticizes the budget for cutting “legitimate, cost-effective programs” and discusses the relationship between the GOP’s proposed cuts and the GMRC recommendations.
The Commission issues its 1992 report titled, “The State Audit.”
Scheiring resigns as Executive Director of the Commission effective August 28th, to be replaced by the Commission’s Associate Executive Director, Steven Clark. Scheiring returns to his position as vice president of administration at Thomas Edison State College, from which he had been on loan to the Commission.
Governor Florio, in his third State of the State Address, notes that the state has made progress in combining agencies and consolidating services, and has “saved taxpayers $1.6 billion by following the recommendations of the Governor’s Management Review Commission.”
Citing a Commission recommendation, Education Commissioner Mary Lee Fitzgerald eliminates a number of positions within the Education Department, including deputy commissioner and assistant deputy commissioner.
In what would be his final annual Budget Address, Governor Florio does not mention the GMRC by name, but does note that “we audited every nook and cranny of the bureaucracy to find places we could save money by cutting waste and duplication.” He notes that he reduced the state payroll by 5,600 employees in the first three years of his administration and would drop another 4,000 positions in FY 1994 without resorting to layoffs.
The Commission publishes the 1993 State Audit Annual Report.
The Commission’s issues the results of its school spending study, recommending that the Board of Education “strengthen the monitoring of public schools by increasing the number of staff members working for the state, using technology more effectively and improving materials used in monitoring.”
A Star-Ledger column criticizes government efficiency efforts in general as being futile, despite Governor Florio hailing the GMRC for leading to savings of $600 million. The article references efficiency efforts by Governors Cahill, Byrne, and Kean as well as an announcement made by Florio’s election opponent Christine Todd Whitman.
The Commission issues a report concerning how to minimize paper flow in government agencies, focusing on the Department of the Treasury [Star-Ledger]
Governor Florio fails in his bid for re-election, losing to Christine Todd Whitman, 50%-49%.
The GMRC is recognized at the first New Jersey Exemplary State and Local Awards as one of eleven honorees for improving “services at reduced costs to the consumer.”
In a newspaper article concerning the GMRC’s recommendation that some state telephone information lines become toll lines, Clark notes that this will be the Commission’s final recommendation, as the Commission’s work will end at the end of Governor Florio’s term.
January 11, 1994
In Governor Florio’s final State of the State Address, he does not reference the GMRC by name, but does state that the government workforce became smaller and more efficient during his term.
January 19, 1994
Governor Christine Todd Whitman is inaugurated as the 50th Governor of the State of New Jersey.