During the last decade, the cost of state government in Kansas grew at an alarming rate. From Fiscal Year 2003 to Fiscal Year 2008, the spending of state tax dollars in Kansas grew by almost $2 billion. That's an increase of nearly 50% in state government spending in just six years.
This led to an inevitable crash that started shortly thereafter and a financial mess that needed sorting through. Kansas began Fiscal Year 2011 - just six months before I took office - with less than $1,000 in the bank. In my first year as Governor, the state faced a $500 million projected budget deficit. Instead of raising taxes to cover the deficit, we reduced spending. In fact, in Fiscal Year 2012, and for the first time in 40 years, the Kansas state government spent less money than it had the year before.
To reign in the era of ever-expanding government, my administration focused not only on the big issues such as tax policy reform, but also on fixing the small things that can add up to big problems.
I directed members of my cabinet and staff to examine every process in state government. A reorganization of agencies enabled consolidation of back office services like human resources and reduced duplicitous bureaucratic labor and red tape.
Immediately upon inauguration we froze state spending and within short order had eliminated more than 2,000 positions that had been open and unfilled for at least six months. We later initiated a voluntary buyout program that allowed more than a thousand state employees who met certain criteria to retire with extra benefits and saved the state millions of dollars in the long term.
The savings quickly mounted and helped turn the $500 million projected budget deficit into an almost $500 million ending balance in just a little more than a year.
We aren't done. I believe that government has much to learn from the private sector in cutting costs, creating efficiencies and improving services. Leading private sector firms cut waste, compensate employees based on performance, eliminate inefficiencies, streamline processes, and provide targeted funding to areas that help them meet their goals. This is how they survive. And although government is different, make no mistake, Kansas is in a competition with its surrounding states, and if we want people to invest and live here, we need these efficiencies too.
My administration is evaluating how we deliver the services Kansans require of its state government and targeting where we can improve that delivery while we cut costs. For the first time in decades, state agencies are assessing utility rates for state office buildings in hopes of negotiating lower rates. We are implementing Medicaid reforms that will reduce costs by more than a billion dollars -- and improve and expand health care for our most needy Kansans.
A new online tool that many companies find useful is now available to state government managers with a click of a mouse. Known as the Cost Management System or CMS, this new system is helping our state agencies become more effective and efficient without negatively affecting services and programs. It directly links agency activities with cost data and tracks those costs over time by calculating department unit costs and per person costs every payroll period. The department unit costs are tracked on a graph so that trends and variances can be identified and analyzed. Any substantial unit cost increase or decrease will allow agencies to investigate its root cause.
American taxpayers expect their governments at all levels to use their hard earned tax dollars well and to live within their means. All governors and state legislatures in our country should insist that every state tax dollar is spent efficiently and effectively in the delivery of services and programs to the citizens who need them.
In 2010, Missouri spent roughly $2,300 in all state funding per resident and Oklahoma spent about $2,800. In Kansas, we spent more than $3,200 per resident. Kansas taxpayers want their elected leaders to be responsive to their needs and responsible with their tax dollars. I believe that becoming a more efficient and effective state government does not mean essential core services and programs such as K-12 Education, Medicaid, and public safety services should suffer.
Rather, with state agencies able to more readily identify and analyze their costs, state government will be able to better target the use of taxpayers' dollars, cut costs though process improvements, and streamline agency services and programs to better serve you and your family. And the best news is, the savings we generate will end up back in your pocket!