Shared Services Model
[ index ]
FY2011 House 2 Budget Recommendation:
Issues in Brief
Deval L. Patrick, Governor
Timothy P. Murray, Lt. Governor
As the Commonwealth continues to
face difficult economic times, it is imperative that our state agencies are given
the tools and flexibility to operate within their budget constraints. Section 5
of the Governor’s budget authorizes each Secretariat to consolidate their core
administrative functions, achieving efficiencies and allowing more resources to
be directed to programs. This proposal does not alter existing reporting lines
or decision making, and it also does not shift funding among line items or agencies.
It does provide to each Secretary the discretion to decide which back office functions
can become shared, and where the administrative capacity to provide these
functions will be housed.
The shared services model
eliminates redundant processes and systems allowing Secretariats to integrate
duplicative activities within agencies, including processing payroll, human
resources, accounts payable and procurement. The shared services model allows agencies
to focus resources on the direct services they provide to the public.
Centralization vs. Shared Services
Governor Patrick’s proposal
differs from typical centralization plans by focusing more on service delivery,
rather than the control and structure of the staff providing services. The
Governor’s proposal allows Secretariats to develop shared services programs
that best meet their needs. There are several areas in which efficiencies are
anticipated: payroll and human resources; financial management, including bill
payment, purchasing and contract administration; and lease and facility
management. Traditionally, these functions have been managed by individual
agencies at a district or regional office level.

Success to Date in Shared Services
There are
several important areas in which a shared services model supports initiatives
that gain efficiencies and savings.
-
Shared Services Support the Executive Office of Health and
Human Services: In January 2003, the Executive Office of Health and Human
Services (HHS) began an unprecedented effort to improve services, coordinate
policy development, and streamline administration of the agencies that make up
the Secretariat. An important component of the reorganization was to
consolidate administrative functions, including human resources,
facilities/leasing management, financial management, transportation services,
and information technology. With the support of the Administration and
Legislature, HHS gained authority to provide shared services and has achieved
significant savings by creating a more efficient and coordinated administrative
infrastructure to support. Some of the initial savings and other fiscal
benefits include:
-
a 25% reduction in human resources staffing and $3.1 million in
savings, while expanding services;
-
Closing of over 20 local offices and consolidating to otherwise
underutilized space, saving $3.1 million;
-
3% or $400,000 savings in Workers’ Compensation costs from fiscal
year 2004, in addition to a $100,000 decrease (10%) in the HRD administrative
cost chargeback, the first ever such reduction;
-
Conversion of six Secretariat Information Technology Operations
Services Division consulting positions to full time equivalents (FTEs) yielding
an annual savings of $300,000;
-
The negotiation by the IT group of a contract associated with a mainframe
connectivity tool for all agencies that has reduced the cost of maintenance by
50% and
-
The development of a Revenue Management Team which has secured
over $20 million in new revenues, while growing the overall revenue intake for
EHS to over $8.8 billion annually.
-
Shared Services Support the Massachusetts Department of
Transportation: The newly formed Massachusetts Department of Transportation
(DOT) is building upon fiscal, human resources and legal shared service programs
implemented by the former Executive Office of Transportation and Public Works
in 2004. Similar to HHS, the DOT model allows division heads authority over
policy and funding decisions while implementation of those decisions is managed
by secretariat staff. This creates additional opportunities and resources for
line level and division managers to focus on core mission activities.
-
Shared Services Language Supports Consolidation of Information
Technology Services: In January, 2009, the Patrick-Murray Administration
signed Executive Order 510, mandating that by
December 30, 2010, Information Technology (IT) services be substantially consolidated
within each Secretariat. This reform was supported by the Legislature in the
fiscal year 2010 budget, as new line items were created that consolidated all
agency IT spending at the Secretariat level. As described in the budget
brief highlighting progress on the IT Consolidation, nearly 60 working groups
and more than 400 people have come together to implement this reform. During its
first year of implementation, many important steps were taken to establish a
culture that encourages agencies to consult with Secretariat Chief Information
Officers (SCIO) on all IT-related funding decisions. However, authority to
provide shared services within all Secretariats – in addition to HHS and
DOT – is necessary to shift from a culture that encourages agencies to
include SCIOs to a culture that mandates coordination at the Secretariat-level,
as required by the executive order.
Prepared by Katie Luddy, Executive Office for Administration and Finance ·
www.mass.gov/budget/governor
For more information contact: contactanf@massmail.state.ma.us (617) 727-2040