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Buried within the 2,047-page state government reorganization bill signed recently by Gov. Asa Hutchinson is a 275-section sequence that will define the most ambitious Arkansas government reorganization in nearly 50 years.

The 84-page section of Act 910 of 2019 establishes Transformation and Shared Services as a Cabinet-level department with equal footing to better-known state agencies (Agriculture, Correction, Education, Finance and Administration (DFA), Human Services). The section and public records suggest the new agency, which emerged from the Transformation Advisory Board's 2017-18 work, will be key to identifying taxpayer savings using tools like shared services.

Potential savings are significant. A 2019 DFA estimate found $15 million in reorganizational savings, including state employee attrition totaling "over 1,400 during the last four years." That amount does not include $19.2 million netted by a new DFA program that reduces outstanding state receivables, a 2018 report shows. A 2016 PricewaterhouseCoopers report noted outdated accounting processes have resulted in a "significant backlog" of taxes. Private Arkansas foundations paid for the PwC report, commissioned by our nonprofit.

Reorganization seeks to achieve far-reaching goals. "These revisions are extensive and will require new policies and procedures to be developed to implement the transition," a clause in the measure explains. Elsewhere, a caveat: "Many of the changes required are highly technical and require careful study of the purpose and context of each Arkansas Code section, with the need for some of the changes not becoming apparent until the implementation."

Three units transferred to Transformation and Shared Services could play major roles--the offices of State Procurement, Personnel Management, and the new Division of Information Systems.

First, PwC recommended developing a central "management function to appropriately identify and manage risk, especially procurement risk." Other states found savings through reduced indemnity and litigation costs.

Second, state employees told PwC "management values loyalty over proficiency too much." The measure authorizes Transformation and Shared Services to develop and establish a merit increase pay system.

Finally, technology can increase employee productivity and expand taxpayer self-service options. PwC observed, "There were numerous processes the team identified as clear opportunities for automation." Many involve "customer-facing processes" where taxpayers interact with agencies to obtain services such as driver's licenses.

The consultants observed, "There are few if any self-service options ... beyond simply paying income taxes online. Research from Forrester has shown that this is not in line with customer expectations; your customers just want an accurate, relevant, and complete answer to their question upon first contact so they can get back to what they were doing before the issue arose."

State government is interested in efficiency. Governor Hutchinson has spoken of "breaking down silos" between agencies. Lt. Gov. Tim Griffin, an early transformation proponent, has spoken of ending "the TOW Tax"--The Old Way Tax. State employee participation in a suggestion program has increased since 2016.

Transformation and Shared Services' ability to solve these problems--and others--will define reorganization.


Greg Kaza is executive director of the Arkansas Policy Foundation (, a Little Rock think tank founded in 1995.

Editorial on 05/06/2019

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