It is often said that when it comes to the legislature it is better to not know how the sausage is made. OK – but sometimes it is worth looking at some of the sausage links. This is about one of them. But first a little personal background.

When I became Minnesota Commissioner of Finance back in 1989, we had a major budget shortfall. Governor Perpich expected me to find and implement a solution. I came up with a plan. We could get there if we engaged our employees in finding significant savings – including deferring planned salary increases. The Governor liked the overall plan, but wasn’t sure the employees would go along. So, he said, “There is a meeting of all the union shop stewards next week. Go share your plan and get them on board.”

I was pretty naïve and went to the meeting convinced that with my charts and graphs and a call to do what was right for our citizens, I could win them over. I didn’t get through the first chart before my audience started chuckling. By the time I finished they were laughing out loud. So, I asked, “What the heck’s so funny?” “Well,”, one of them said, “it’s pretty clear that you don’t know what the heck you are talking about.” (I wondered how he knew.) “How do you know that?” I asked. “Look”, he said, “here’s how it works. Every year in May we paint every building in our department inside and out. We can’t save money because we are wasting our time spending it.” “Well, that’s crazy!” I said. “Of course,”, came his reply, “and worse, this happens during the opening of the fishing season when we all want to be at the lake.” “But why are you doing this?” came my naive question. “See you really don’t get it do you? May is the month before June and June is the end of the fiscal year. If we have any money left in our budget at the end of the year the ‘angels of death’ from your department will scoop it up and take it back to the treasury. And as they fly away, they will tell us – ‘if you didn’t need this money this year you won’t need it next year’ – and then they cut our budget. If we do the right thing we get punished. You can give all the speeches you want about saving, but the system is telling us louder and more powerfully than you can – ‘spend the money, spend the money!’ And we do, even if it’s crazy.”

When I got back to my office, I quizzed our staff about how we could put a stop to this particular craziness. We came up with the idea of telling departments that they could keep half of everything they saved by the end of the year, use it to invest in delivering better results that support their department’s mission, and that we would not automatically cut their budgets for the next year. It worked! As best as I can recall we doubled or tripled the savings that year. A great lesson in the power of incentives.

You might think such an effective practice would continue, but it did not. Soon enough the ‘way it had always been’ was restored. After all, what we did was an executive action, not backed up by legislation.

Then in 2011 the legislature rediscovered the idea and put it into law – with a twist. The law they passed then, called the State Agency Value Initiative or SAVI, did assure departments that they could keep 50% of their savings to be used to invest in achieving their mission – but only if:

1) The department created an internal review panel made up of half managers and half employees, and

2) Projects funded from the savings were approved by the review panel

But only after:

3 a) The proposed projects had been posted on the department web site for 30 days, and

3 b) Only after the Commissioner of Management and Budget had approved the project

3 c 1) But only after the Commissioner of Management and Budget had obtained approval from Legislative Advisory Commission, and

3 c 2) Only after the Commission had posted the project on its web site for30 days, and…

3 c 3) Had taken action to approve the project within that 30-day time period. Failure of the Commission to act was the same as turning it down

If you followed all that, and especially if you did not, you will not be surprised that it did not work. That legislation died 7 years later for lack of interest by departments and employees in jumping through all those hoops. A great lesson in providing incentives to do the right thing and then totally undermining them with a bushel basket full of bureaucratic BS.

Now… in 2025 it’s back. This same legislation, in virtually identical language, was adopted in a House committee following only 20 minutes of discussion in early February, then passed by the full House, and is now included in one of the Great Big ‘everything we talked about this year’ bills (they call these Omnibus bills) that the House and Senate are hashing out. It is one of the potential sausage links.

If insanity really is doing the same thing over and over again and expecting a different result, then this thing is just plain crazy! Encouraging departments to save by rewarding their success will work if the legislature takes out all of the bureaucratic BS that makes this piece of the sausage so distasteful.

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