Grace Commission

Require private sector-led review of government systems

The Issue

In the late 1960s, then-Governor Ronald Reagan signed an executive order establishing the Governor’s Survey on Efficiency and Cost Control, a private citizen-composed commission tasked with examining and evaluating the entirety of California state government. The monumental effort sought to bring a fresh perspective to old systems and determine what, if anything, could be improved.

Making up the commission’s membership were 250 business and industry professionals who freely donated their time and expertise toward achieving a common goal. Over the course of 10 months, this group thoroughly examined California state agencies and developed close to 2,000 specific recommendations. Full implementation of these recommendations could have yielded $22 million in onetime savings, $233 million in long-term reductions, $153 million in cost avoidance, and $118 million spared through deferrals. In addition to these state government savings, the commission also anticipated that their recommendations could produce annual savings of $92 million and $67 million for federal and local authorities, respectively.

Drawing from this experience years later, then-President Ronald Reagan initiated a similar effort examining the federal government in his first term. In the early 1980s, President Reagan signed an executive order establishing the “Grace Commission” to identify excessive federal expenditures and improve managerial accountability. Like the California Commission before it, the Grace Commission was entirely constituted of private sector citizens who found numerous ways to better serve the public.

Two years after its creation, the Grace Commission released a report containing almost 2,500 separate and distinct recommendations to right-size the federal government. According to the commission’s findings, the full implementation of their recommendations, either through administrative or legislative action, could save an estimated $424.4 billion over a three-year period plus achieve cash accelerations of $66 billion. Importantly, all of its proposals were achievable “without raising taxes, without weakening America’s needed defense build-up, and without in any way harming necessary social welfare programs.”

Over time, a number of the Grace Commission’s proposals became law, temporarily bending down the federal government’s cost curve and improving the delivery of services. Even those recommendations that were not adopted were useful as they helped to arm the grassroots with ideas to make government better. The entire affair, along with the one that came before it, was a success both fiscally as well as from the standpoint of creating a model for others to emulate.

In Texas, there’s an obvious need to relaunch Reagan’s efficiency project. A variety of factors—like heightened population growth, near-term budgetary excesses, and long-term structural imbalances—are putting pressure on state and local governments’ budgets. If left unchecked, these pressures will erode the Texas Model of low taxes and limited government.

Hence, Texas’ state and local governments should be required to undergo a thorough study of all systems, operations, and procedures conducted by private sector volunteers. A successful commission promises to streamline government services and identify resources that could be shifted to other, higher uses like lowering taxes, paying down debt, improving infrastructure, and improving the solvency of public pension funds.

Recommendations

Require state and local governments to create separate, independent, private sector-led commissions to conduct a comprehensive review of all systems and procedures. Mandate full cooperation from all relevant personnel.

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