A Ball State University study explains how local government reform could save Indiana taxpayers $620 billion each year. The evidence is forty years of data on consolidation.

A summary of the report appears courtesy of Inside Indiana Business, but the actual 50 page document [PDF] on the University website explains the techniques used in the study:

We use statistical methods and data on consolidation referendum attempts in the United States since 1970 to test whether governments that consolidate (voters approve the consolidation referendum) have higher spending prior to consolidation (measured by local government employment, payrolls, or expenditures) than the average local government in the state. If these indicators are higher than the average local government in the state, this suggests that the consolidation is driven by the level of government spending. Citizens perceive spending to be “out of line,” and consolidation is one way to address this. If, on the other hand, governments that consolidate have lower spending or spending is not statistically different from the average local government in the state, we interpret this to mean that consolidation is driven by the quality of government and that citizens view consolidation as one way of improving quality.

The approach employed by researchers to prove their point is brilliant and methodical. Review other areas across the country and identify correlations between consolidation and savings. This gives weight to the argument for increasing government efficiency. For Indiana, the value of the process is around $620 million per year, every year.

The study also outlines a perspective that is fairly well known:

Economists (and the general public) have long recognized that there is likely to be a general slackness in government operations. X-inefficiency occurs when a government fails to produce the maximum output obtainable with a given level of inputs. The result is that costs are higher. Government inefficiency may result from several sources including lack of competition, coordination difficulties, corruption, or padding the budget.

Although likely not their intent, this paragraph neatly defines the sources of inefficiency into segments. At Slaughter Development, we are interested in exactly one area: “difficulties in coordination.” Our methodology engineering services help government and non-profit clients to address challenges in workflow, process and resource management. If you work for a state or local agency looking to reclaim some of that $620 billion dollars, or if you work for a private sector business ready to make improvements to productivity,  reach out to Slaughter Development today!

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