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Revolutionary Budget Process Underway in MichiganWins Prestigious National Accolades for Wash. State& Consulting Firm Working HereThursday July 28, 2005 3:29 pm ETThe Public Strategies Group Helps Another Client Win an 'Oscar' for

Reinventing GovernmentLANSING, Mich., July 28 /PRNewswire/ -- A revolutionary budget process employed byMichigan's Legislature has won national accolades for the state that first used it, Washington,and the public sector consulting firm that inspired the process, The Public Strategies Group(PSG).

One of PSG's clients, the State of Washington, was named one of 18 finalists for theprestigious Innovations in American Government Award -- often referred to as the "Oscars"of government -- from the Ash Institute for Democratic Governance and Innovation atHarvard University's Kennedy School of Government (http://www.innovations.harvard.edu/).Washington was chosen from a field of more than 1,000 applicants. At a ceremony inWashington, D.C. yesterday, another client, the State of Iowa, was named one of six

recipients of the institute's highest award. Both states were recognized for projects designedand implemented in partnership with PSG.

"It is enormously exciting to help our clients achieve award-winning innovation," said PSGCEO Babak Armajani. "Our goal is to be the world's number one resource for reinventinggovernment and this recognition shows we are doing that."

BUREAUCRACY-BUSTING STATE AGENCIES

The State of Iowa won the "Oscar" for launching a bureaucracy-busting innovation PSG callsCharter Agencies (http://charter.iowa.gov/ca.html ). State agencies in Iowa volunteered tosign "charter" agreements with Gov. Tom Vilsack, giving them greater administrative

flexibility as an incentive to better deliver public services. In exchange for increased flexibilityand authority, Charter Agencies accepted the charge to find better ways to meet citizens'needs, to be held accountable for those results and to reduce costs and/or generate morerevenue. In just the first year of operation, Charter Agencies exceeded their financialperformance targets by 50 percent, generated $22 million in savings for the State andlaunched scores of customer service improvements(http://iowaregov.typepad.com/ia_weblog/files/charter_agency_s_may_2_05.doc).

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A WHOLE NEW WAY TO BUDGET

The State of Washington was recognized as a finalist for spearheading a first-of-its-kindbudgeting approach that it calls Priorities of Government. The traditional budget processquickly becomes an exercise in cutting services, raising taxes or both. The Priorities ofGovernment approach as pioneered in Washington begins by asking "How can we get the

most results that citizens value for the money they pay in taxes, fees or charges?" Theprocess establishes priority results that citizens value and challenges agencies ordepartments to propose how they could best achieve those results. From the hundreds ofproposals submitted, elected officials buy those they believe will make the greatestcontribution to the citizens' priority results.

Washington State has used PSG's Priorities of Government process since it was launchedby Gov. Gary Locke in 2002. It has been widely credited with fixing the state's $2.6 billionbudget deficit and helping restore the public's faith in the public sector.

The Michigan Legislature is the first legislative branch in the country to adopt the Priorities ofGovernment approach to producing a state budget. PSG has been working with leaders inboth the House and Senate since January 2005 to establish a budget process that:

-- is constructed around the results that Michigan citizens expect;

-- will clearly identify how much of the approximately $40 billion the

state plans to spend in FY2006 will go towards delivering each

result;

-- is based on a thorough examination of every program in every fund

(not

just the General Fund);

-- evaluates and ranks those programs based on their ability to produce

the results that citizens expect; and

-- recommends buying those programs that rank the highest and

eliminating

those programs that "fall below the line" where the amount of money

available runs out.

"It has been an honor to work with leaders in the House and Senate on this importantreform," said PSG's Project Lead Steve Struthers. "The fact that the approach has beenembraced by Michigan's Republican legislative leaders and its Democratic Governordemonstrates that it is grounded in common sense and citizens' interests."

The "budgeting for outcomes" process is profiled in the recent PSG book, The Price ofGovernment (David Osborne and Peter Hutchinson), and PSG has been hired to helpimplement similar budgeting processes around the country, including the states of Iowa andMich.; the cities of Azusa, Calif., Los Angeles, Calif., Fort Collins, Colo., Wichita, Kan. andSpokane, Wash.; and the counties of Snohomish, Wash. and Multnomah, Ore.

ANOTHER PSG PROJECT IN MICHIGAN

PSG has also been retained by the Defense Reutilization and Marketing Service (DRMS)division of the U.S. Defense Logistics Agency in Battle Creek, Mich. DRMS processessurplus military property from around the world and then readies it for re-use within theDepartment of Defense (DOD) or other federal and state agencies or for sale to the generalpublic. PSG has been working with DRMS executives since 1995 to transform DRMS into aresults-driven, customer-focused agency.

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DRMS has substantially reduced its infrastructure while continuing to meet the ever-changingdemands of its customers around the world. It has implemented pioneering partnerships withthe private sector that have resulted in increased sales of surplus military property. It hasalso recently completed a reorganization that for the first time assigns customer relationshiprepresentatives to particular customer segments.

A TRACK RECORD OF SUCCESS

This isn't the first year PSG principals have been involved in the Harvard government"Oscar." In addition to this year's win and finalist finish, PSG clients won the award in 1986(http://www.innovations.harvard.edu/awards.html?id=3494), 2000(http://www.innovations.harvard.edu/awards.html?id=3879) and one was selected as a semi-finalist in 1990. Iowa's Charter Agencies and Washington State's Priorities of Governmentwere also recipients of the Council of State Governments' 2004 Innovations Award.

St. Paul-based PSG has six offices located around the country (Boston, Omaha, LosAngeles, Portland, Ore. and Washington, D.C.) and has successfully led or assisted in thetransformation of public organizations at all levels (state, federal and local) and on sixcontinents. PSG works exclusively with public organizations, helping them transform

themselves into more effective, customer-focused enterprises. PSG generates about $8million a year in revenue. The firm has 17 partners and draws on a network of more than 50consultants around the country. For more information, visithttp://www.psg.us/.

Source: The Public Strategies Group

http://www.innovations.harvard.edu/awards.html?id=3494http://www.innovations.harvard.edu/awards.html?id=3494http://www.innovations.harvard.edu/awards.html?id=3494http://www.innovations.harvard.edu/awards.html?id=3879http://www.innovations.harvard.edu/awards.html?id=3879http://www.innovations.harvard.edu/awards.html?id=3879http://www.psg.us/http://www.psg.us/http://www.psg.us/http://www.psg.us/http://www.innovations.harvard.edu/awards.html?id=3879http://www.innovations.harvard.edu/awards.html?id=3494