Starving the Beast: Government in lean times

As we’ve discussed in various blog posts and issue briefs, most state agencies received basically flat funding or were dealt budget cuts of 5 to 7 percent for the new fiscal year beginning July 1st, even as inflation leads to increased operating expenditures and the cost of employee health care and retirement contributions continue to mount. The result is that most agencies are being underfunded for the basic functions and missions that they are expected to accomplish, whether that is operating schools or parks, regulating environmental quality or nursing homes, protecting at-risk children, or preserving  public safety.

But what does this situation mean for the agencies, departments, and school districts that operate public services? We usually don’t hear stories about the impact of underfunding unless and until there is a crisis. Yet the reality is that many public agencies at all levels of government, especially regulatory and administrative agencies, are perpetually underfunded.  Resources are always scarce, and even in good budgetary times, most legislators prefer to fund programs that provide direct benefits to their constituents than those that do the unglamorous work of  licensing, inspecting, investigating, and adjudicating. This is especially true here in Oklahoma, where we are among the bottom five states in the amount we spend per person on state and local government

Recently, the journal Health Affairs published an interview with Kerry Weems, who served as Interim Director of one of those unheralded but vital regulatory agencies, the Centers for Medicare and Medicaid Services (CMS), during the last 18 months of the Bush Administration. CMS is charged with overseeing expenditures of almost $700 billion annually in the two major public health care programs. In particular, it has the responsibility for preventing and investigating waste, fraud and abuse in these programs. But in Weems’ view, one that is shared by many others, CMS is not staffed at levels necessary for it to fulfill its mission. Here’s how he describes the impact that a shortage of resources has on his former agency:

And in many ways, right now CMS behaves like a resource-starved agency, which it is. The staff feels a sense of fatalism when they begin complicated tasks that carry out the law. The sense develops because while the agency will do its best, we don’t have enough resources to do all of these tasks well, so our final products are not always 100 percent…

CMS is a weakened organization. It has the capacity to pay bills and prepare the annual payment notices. But after that, there is little capacity, much less time, left to develop innovative approaches to health care, to think through what a system of higher quality would look like.

There is a widely-held belief that cutting budgets, or keeping funding levels flat over an extended stretch, is healthy for government by forcing it to trim the fat and become leaner and more efficient. In reality, “starving the government beast” has similar effects to starving an individual. Before long, that which is being starved becomes weak, lethargic, and dispirited. As Weems discusses for CMS, underfunded agencies become less efficient because they lack the resources to do their job well. Operating on a shoestring also means being unable to invest the time and resources needed to innovate and think creatively.  And in overworked, understaffed agencies, staff suffers from fatigue and declining morale, which tends to lead to rapid turnover among the better employees and a critical loss of experience and expertise.

The Health Affairs article was titled “Doing More With Less”. That is what we are demanding of many of our public agencies, nationally and in Oklahoma, especially but not only in a time of declining revenues. We need to be asking whether this a reasonable expectation, and if not, how we are going to get our expectations of  governments back in alignment with the resources we provide them.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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