Photo: New York Governor David A. Paterson

New York Governor David A. Paterson's executive budget, announced today, includes a number of proposals to deal with a $13.7 billion 2009-10 state budget deficit by eliminating duplicative services, consolidating overlapping state agencies, lowering the cost and size of the state workforce, and closing underutilized state facilities.

"With the state facing a fiscal emergency, we need to look for innovative ways to improve the operations of our government and deliver services more effectively," said Paterson. "These reforms are a first step toward fundamentally reevaluating the way we do business, which will mean significantly lower costs for taxpayers over the long term."

The Plan

The executive budget recommends that seven state agencies merge or integrate with existing agencies, as a first step toward future consolidations. Two additional agencies would have their operations hosted by other agencies. For example, the New York State Foundation for Science, Technology and Innovation (NYSTAR) would merge with the Empire State Development Corporation (ESDC). The State Employment Relations Board is eliminated and its functions absorbed by the Public Employment Relations Board, the Department of Taxation and Finance would host the operations of the Office of Real Property Services and the Division of the Lottery would host the operations of the Racing and Wagering Board.

The executive budget reduces the size of the state workforce by 3,108 positions in 2009-10. This will be accomplished through consolidations and facility closures, as well as the continued implementation of a hard hiring freeze. Layoffs are primarily limited to the impact of agency consolidations or facility closures. Pension enhancements for some categories would be eliminated as well.

Shared Services

To build toward future efficiencies, the executive budget would also establish a new Council on Shared State Operations to oversee the development of a "shared services" model in New York, co-chaired by the director of state operations and the director of the budget. A shared services approach seeks to centralize back-office operations, thereby creating cost savings while simultaneously improving the services offered. an approach that has been supported by private sector firms for years and has been increasingly adopted in the public sector.

Consolidating administrative functions shared by multiple agencies will free agencies to focus on their core missions of providing essential services to New Yorkers, said a release from the Governor's Office, rather than administrative tasks.

Over the next several years, state agencies will work together to create shared service centers with expertise in six distinct operational areas. These centers would gradually become responsible for administering the following consolidated lines of business across state government:

  • Financial Management System (FMS). The Division of the Budget, in partnership with the Office of the State Comptroller, will launch development of a system to support the delivery of statewide financial services including budgeting, procurement, accounts payable and travel expense reporting.
  • Procurement. A new Office of Procurement Services will evaluate and improve the state's procurement policies, coordinate purchasing among state agencies, develop new approaches to leverage the buying power of the state, and assist in the development of an e-procurement system as part of the statewide financial management system. The new office will be led by a chief procurement officer (CPO) following a model used by the private sector and other states to capture savings through an ongoing identification of strategic opportunities to partner with sellers of goods and services.
  • Human Resources. The Office of Civil Service and the Office of Employee Relations will explore how the state can better integrate its existing human resource systems and coordinate employee benefits, training, recruiting and time and attendance.
  • Technology. The Office for Technology will focus on the delivery of disaster recovery services, consolidation of servers into a statewide data center, required security and improvements to telecommunications.
  • Asset Management. The Office of General Services will focus on managing state-owned and leased real property, and explore fleet and surplus property initiatives.
  • Customer Service. A consortium of agencies will also become responsible for developing statewide customer service activities, including a statewide Web-based portal for "one-stop" applications for licensing and permits, and potentially a statewide call center.