here for PDF format
here for participants' responses to this interview.
Murphy, Administrator, Beltrami County
Civic Caucus, 8301
Creekside Circle #920, Bloomington, MN 55437
March 18, 2011
Dan Loritz (chair), David Broden, Paul Gilje, Sallie Kemper, Ted Kolderie,
Jim Hetland, Verne Johnson, Jim Olson
Summary of meeting:
In this discussion Beltrami County Administrator Tony Murphy describes the
need for changing the relationship between counties and the states
regarding how services are delivered. Instead of the state dictating how
services should be provided, holding county officials accountable for the
processes, Murphy argues that the state should hold counties accountable
for results and allow them to innovate in how they meet the objectives.
This will improve the
engagement of local staff, who, he contends, are well positioned to know
what is working and what is not; as well as changing the role of state
staff from governing compliance to providing technical assistance. Murphy
describes the work of Beltrami County in moving in this direction.
A. Welcome and introductions
Murphy was appointed the County Administrator for Beltrami County,
Minnesota, on October 15, 2001. Prior to his appointment Mr. Murphy served
seven years as the first City Administrator of Ashland, Wisconsin. He has
also worked as the City Administrator and Assistant City
Administrator/Economic Development Director for the City of South Jordan,
Murphy received a
Master of Public Administration degree from Brigham Young University. He
has taught public administration courses at Bemidji State University and
Urban/Regional Planning at Northland College, in an adjunct faculty
Murphy is a Beltrami
County native and is proud to say that he is a Bemidji High School
Lumberjack. He is married and has three
B. Comments and discussion
present county-service model may be unsustainable
The Beltrami County
seat is in Bemidji. The county is "property poor", able to levy a tax
against only 25 percent of its land. And except for those properties that
are on a lake, the land value is relatively low. Therefore they have one
of the state's highest property tax rates, though the rate has been
reduced in recent years. Yet there is very high demand for services,
"insatiable" demand, as some see it.
Murphy described how
the County Board engaged a strategic planning process for the county,
projecting out service demands, demographics, and financial forecasts.
"We realized the path
we were on was literally unsustainable," he said. They saw that by
adhering to state requirements they were going to be less and less able to
meet budgets. And there was virtually no attention to outcomes. "We were
meeting the state mandates but we didn't have any data to determine
whether we were accomplishing expected results."
The common practice is
to look at the inputs: how much money spent, number of people served. "And
that's about as far as we went."
He gave the Beltrami
County Board of Commissioners credit for recognizing a need to find a new
business model. "We needed to evaluate what we do and redesign how we do
it-and the County Board put the needed support behind that effort."
The question they
faced was how to create a government that is more outcomes-based. "We had
to learn on a new vocabulary. We went through a process of prioritizing
objectives around the values and priorities of the citizens of the county
and established key performance measures. Sadly, due to the historic
relationship that has evolved between the state and counties, many county
employees had started to think of state regulators in St. Paul as their
primary customers-not those that received the services or the public that
Murphy described that
Beltrami County determined that they needed to find way to align
resources, efforts, departments, and policies. They began the process four
years ago when there was not yet a crisis, but knew that there eventually
would be since they had concluded the system was not sustainable. "Lo and
behold, we soon found ourselves in an economic crisis that requires
Beginning the change
between counties and the state has long been that of the counties as
creations of the state, charged to carry out those programs and services
created by the state. Without state authorization, counties have little
ability and little authorization to innovate. So, Beltrami County's
change initiative proceeded-quietly, and for some years.
Soon the times started
to change, legislators changed, and curiosity was aroused about what
Beltrami was doing. Murphy expressed surprise at the number of times he
has been asked to speak on the topic of "outcome-based government" and is
always happy to do it. He is trying to cast light on the point that
counties should focus less on service delivery and inputs, and focus more
on results and outcomes.
"We're experiencing a
lot of success with that seemingly simple paradigm shift," Murphy said.
ideas improve performance: 'The answers will come from the trenches, not
the ivory tower.'
"We find that as we
focus more on outcomes we get more ideas-and we're able to save costs.
"In recent years we've
lowered levies, and returned significant amounts of budgeted funds to fund
reserves to be reprioritized for outcomes. We find more partners, and
better partners at more strategic levels. We have strategically aligned
around outcomes. In time, there may be programs that may drop off the list
of things we provide. It is nearly impossible to prioritize programs and
services; but you can prioritize for outcomes."
Examples of reforms
Murphy cited an
example where service has changed as a result of their rethinking.
Murphy noted that
counties are required to provide chemical dependency treatment programs to
those that need it or are ordered by the court into treatment. Counties
must also contribute a cost-sharing requirement, and therefore counties
carefully track the number of clients placed in treatment and the amount
of money spent (inputs). "Counties and the state are spending a lot of
money each year on chemical dependency services- but what are the
results?" He described asking the program administrators what the success
rates of the services are, and they couldn't say. How many people stay
sober, for how long? They couldn't say. "But we do know we're meeting our
cost-share obligation, and we do know that everyone that requests the
service, or are ordered into treatment, is enrolled in treatment."
The problem he said is
that they are not setting performance targets and measuring results. The
goal is not to provide treatment; the objective is to help people get and
seeks to employ "outcome-based contracting" to achieve a better return on
investments. Perhaps the county could pay a certain amount when the
client enters treatment, another payment upon completion and then a final
payment or a bonus to providers when the client remains sober for 6 months
or a year. That kind of strategic alignment for outcomes encourages new
ideas, new partnerships and might address some of the "revolving door"
problems of many traditional services and programs.
QUESTION AND ANSWERS
hard times, the state must provide flexibility
Lutheran Social Service has spoken recently to the House Redesign Caucus
with the message that considering expected constraints on financing and
prospects for reductions in state funding, LSS cannot maintain service
levels for the people they're responsible for.
Their essential point
is that if the state decreases funding for services, then the state has a
responsibility to set service providers free of many state regulations so
that they can innovate in how they prioritize and meet the needs of their
Is that reflective of
the county's position?
Counties agree that flexibility in meeting outcomes is essential. We
probably have enough money to accomplish our outcomes, if we have greater
flexibility in our delivery approaches. We probably don't have enough
money to deliver all of the services and programs we're mandated to
provide. Counties are concerned that the state-supervised,
county-administered service delivery approach is unsustainable and fails
to achieve expected results. Under the current state/county relationship,
counties are not only mandated "what" to do but "how" to do it. If we can
redefine that state/county relationship we can get past the mistrust by
focusing on outcomes and encouraging innovation. The new ideas we seek
must come from the trenches, not the ivory tower.
Can you give us an example of the types of regulations you'd like to be
Counties would like to challenge the historic concept of 'Dillon's Rule';
that to innovate you have to get permission from the state through
legislation or a waiver from an agency. Instead, counties would like to
join other states that operate under the 'Cooley Doctrine' where there is
an almost implied consent to innovate.
The Dillon rule holds
that an entity only has authority to do what it is legislatively permitted
or otherwise authorized in advance to do. The Cooley Doctrine comes from
the view that authority to govern is derived from citizens and that
government closest to the people operates best.
Counties want consent
to innovate, to test new ideas. Counties want to be the laboratories of
democracy, the incubators of innovation, which is needed to keep pace with
a world that seems to be changing at ever increasing rates. If the state
would loosen their control over the "How" that each county must operate
under - counties can develop new best management practices, demonstrate
measurable results, increased transparency, and improved accountability
for results, and in the process likely save money. Again, counties want
permission to test their ideas. Some ideas will succeed, others might
fail, but we will create a culture of learning that all government will
benefit from and that will eventually produce better outcomes for
Doesn't the state have an authority to say how they'd like state money
Sure-the State Legislature needs to establish the targets, the "What" that
sets state priorities. It is even better if those targets are tied to a
comprehensive state strategic plan that defines the vision, values and
objectives of the state. But, when the Legislature or when the Agencies
mandate the "How" then innovation is stifled and outcomes suffer. The
"one size fits all" service delivery mandates are not efficient, effective
In the 1970's the counties got the law known as 'Joint Powers' amended so
that two counties could do together what only one of them is authorized to
do. It has potential because it crosses systems-schools, city, county.
What use has been made of that authorization?
Counties have made extensive use of joint powers authority. Beltrami
County has joined a multi-county-based purchasing group that is producing
very strong outcomes in the areas of public health. Joint powers
relationships for waste disposal, joint law enforcement, joint technology
services, joint planning, etc., are being implemented in nearly every
county of the state.
However, I'm not
convinced we have too many service delivery authorities. Before we rush to
the conclusion that mandated consolidation of government units or service
providers is desirable, there needs to be a more rigorous debate over what
the state is asking service delivery authorities to do. Again, if the
state is clear about the performance targets (the "What?") then counties
and other partners should have an opportunity to use their creativity to
solve the service delivery problem (the "How?") and consolidations might
be a big part of that discussion.
Eliminate silo mentalities to spur effectiveness and efficiency
Is there anything the state could do to push county-based innovation
I believe that if counties are given the needed flexibility to innovate
they'll knock your socks off. Hold counties accountable for outcomes, not
inputs, and counties will deliver. Give us a chance.
At the risk of
sounding elementary, what happens historically is the state mandates
services and programs, via silos. Local governments then mimic the silos
for ease in meeting state compliance activity. In Beltrami County we're
striving to eliminate the silos. We have developed a cross-departmental
approach that allows us to better identify overlap, duplication and to
eliminate those scenarios where the right hand might not know what the
left hand is doing.
By breaking down the
silos we are more effective. But, the state can also help counties by
allowing greater flexibility in how state funds might be spent. By
coupling multiple funding sources, across the silo boundaries, we can be
more efficient in our efforts to fund initiatives and produce results.
Talented people trapped in bad system arrangements
How do employees like the shift from focusing on inputs to outcomes?
I have a lot of
talented county employees that are working in state mandated processes
that are very unworkable and highly ineffective. As we give our employees
more power to redesign those systems and processes we reap the benefits of
innovation, cost savings and better organization culture. The use of
"lean government" principles is really helpful in removing frustrating
redundancies and non-value-added process steps. We have also been
grateful to find state employees who have been champions of our redesign
efforts. Again, there are some really talented state employees who are
trapped in bad systems and processes. I dream of a day when those
talented state employees are able to truly serve as technical experts and
advisors to redesign processes, not just compliance monitors.
What is your relationship with unions? Is anyone opposed to changing focus
These are difficult days for public employees. Too often public employees
are being made the scapegoat for financial challenges. It feels unfair
for the state to impose awful systems and processes on state and county
employees and then blame those employees for poor performing services and
escalating costs. Our relationship with employees in Beltrami County is
evolving. We are saying we want to empower employees to innovate, improve
systems/processes and value the outcomes they are producing. There is a
healthy cynicism because they have heard those offers before and nothing
changes. But we are seeing pockets of employees who are moving forward
and really doing some amazing things with culture change, process change
and cost control. Our experience is that when we take the handcuffs off
our employees they can be very creative, and they have the ideas that we
need to invest in.
As a practical measure, how do you hold people accountable?
During the last legislative session there was a bill, drafted and
supported by counties, to allow service delivery authorities in the area
of human services. Part of the accountability mechanism for that statute
was that if a county is not meeting the outcome measurements the state
could withdraw the ability of that county to provide the service - the
service (and funding) would be transferred to another county that is
performing to expectations. Counties are not afraid of being held
accountable for outcomes (provided we have some flexibility in pursuing
results) but the forced compliance with input measures must be changed. I
think there has to be consequences, but there also should be some
tolerance for calculated risk. Public policy should not penalize
In closing Murphy was
optimistic, saying that, "a focus on outcomes is not a partisan issue - it
is a discussion of our shared values and the priorities of the citizens of
the state. We have been given a tremendous opportunity for a paradigm
shift that can significantly improve the state/county relationship for the
"I may be the voice
today at this interview," he said, "but there are a lot of county
officials who have been supporting and advocating for these kinds of
changes for a long time. Maybe the time is ripe for real reform."