by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
When Harvard Business School professor Clayton Christensen was recruited by McDonald’s to look into the company’s milkshake sales, he found that 40 percent of milkshakes were purchased for breakfast. This unexpected finding led him to ask, “What ‘job’ are people ‘hiring’ the milkshake to do?”
He learned that consumers wanted convenient calories while commuting. A milkshake can be held in one hand, drops no crumbs, and fits in a cupholder between drinks, and having to suck a thick shake through a thin straw provides the customer something to do over the course of a long commute. Sandwiches and hotcake platters do not offer the same combination of assets.
With a better understanding of what their customers “hire” milkshakes to do, McDonald’s made their shakes thicker, added small bits of fruit for unpredictability, and even relocated their dispensing machines to the front so milkshake customers could avoid long drive-thru lines. The result? A huge boost in sales.
What job do we hire a government program or agency to do? That mission gets reflected in the organic statute to establish each agency or program. Statutes define the mission and structure that determine whether the agency will succeed at its job. Continuation reviews and program evaluation only go back to what the law says, not what it should say. Cabinet secretaries’ first question is not “What’s my agency’s mission?”, but instead, “What’s my agency’s budget?” Despite our state constitution’s admonition for a “frequent recurrence,” rarely do reviews get to fundamentals.
Current debates on Public Health and Medicaid illustrate the challenge of defining government’s role in law and organization. Goals for programs often measure the number of people enrolled, not the number of people who successfully transition from a support program to a better life. Legislative committees deal with raising (finance) and spending (appropriations) money.
For a brief time in the middle of the twentieth century, Congress had a committee whose function was to reduce spending. The Joint Committee on Reduction of Non-Essential Federal Expenditures, referred to as the Byrd Committee after its longtime chair, Sen. Harry Byrd, launched in 1941 to ensure the country could fund the needed military buildup without generating crippling debt and inflation. It lost traction after 1945, then became moribund in the last decade of its existence until 1974.
Committee structure is an important factor in government’s function. In 2015, for example, when the zoo, aquariums, and parks were moved from the then–Department of Environment and Natural Resources (whose primary function is environmental regulation) to the Department of Natural and Cultural Resources (whose primary function is managing state sites and resources for public access), the biggest legislative hurdle was deciding which appropriations subcommittee would oversee the newly expanded agency’s budget. Federal food assistance is managed by the Department of Agriculture, but it goes to the Department of Health and Human Services (DHHS) in North Carolina. Within DHHS, the Division of Social Services manages the Supplemental Nutrition Assistance Program (SNAP), and the Division of Public Health manages the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Besides WIC, the Division of Public Health also has responsibility for AIDS, sickle cell, built-environment, racism, and social determinants of health, along with pandemic preparation and response. AIDS and tuberculosis are the only named diseases under “Infectious diseases.” These details are important to remember given the complaints nationally and in North Carolina about underinvestment and cuts to public health budgets. State spending may not be at the level advocates would want, but it has been consistent since 2011. Cuts by the General Assembly under Democratic control between 2008 and 2011 were a result of lower spending on WIC, not the sections that get “needles in arms” in a public health emergency.
As one example cited by Kaiser Health News of cuts to public health, spending in Wake County climbed from $4 million in 2009 to $10 million in 2011, fell back to $5 million in 2015, and reached $30 million in 2019 before the current pandemic. These numbers have the same challenges as at the state and federal level because they include WIC administration, vital records, and other items that do not enter the popular imagination when speaking of “public health.”
Similarly, many people including legislators think Medicaid and other welfare programs are designed to be temporary assistance with the aim of getting people back to work and “self-sufficiency.” Judges have disagreed and have struck down work requirements in some states on the grounds that health care coverage for the poor is the purpose of Medicaid.
Such fundamental differences in basic assumptions about programs point to a need for regular reconsideration of each program, not just whether it is accomplishing its job but whether it has the right job. Ideally, such a review would also precede the creation and appropriation of funds to any program. Too many state dollars are appropriated without a clear sense of what is being purchased with them.
Regulations provide a good model for emulation. Agencies must submit new regulations to cost/benefit analysis, and regulations must go through sunset reviews. More than 2,000 rules have been eliminated since 2013, and over 5,500 have been considered for revision.
As Christensen’s milkshake example demonstrates, the right questions can lead to better answers. If “every system is perfectly designed to get the results it gets” and those systems in state government are designed by statute and rule, then better results depend on better statutes and regulations. It follows that government’s institutions and laws should be subject to more questions.