iowa charter agencies

Frequently-Asked Questions
about the Charter Agency Initiative

1. What is the charter agency initiative? The charter agency initiative is a specific, measurable way to “reinvent” the operation of Iowa state government. A charter agency is a state department or division that has been given greater administrative flexibility so that it can work to accomplish its public purpose in a more innovative, results-oriented way.
    
2. Why are we talking about “reinventing government?” Many government regulations, policies and procedures have been enacted during the almost 160 years since Iowa became a state. Some of these have become “red tape” over time, requiring citizens and/or state government employees to take extra steps to get things done. Now is an excellent time to encourage the people running state government programs to find and remove red tape requirements within their agencies, improving services to the citizens, and saving tax dollars.
    
3. How will charter agencies fit into this plan? Charter agency directors have accepted the charge to find more efficient and effective ways to meet their agencies’ public purposes and financial goals. To encourage innovation, they have been relieved of some traditional administrative requirements—without compromise to Iowans’ health and safety or violation of law. These directors are responsible for achieving more measurable results than ever before, and for reducing agency operating costs and/or increasing entrepreneurial revenue collection.
    
4. What is the legal authority for creating charter agencies? Iowa Code Section 7J.1 allows the Governor to name charter agencies. Chapter 7KJ defines the flexibilities available to a charter agency, describes the process for setting aside administrative rules, and sets up a charter agency grant fund. Governor Vilsack’s Executive Order No. 28 designated six departments or divisions as charter agencies.
    
5. What preferential budget treatment is given to charter agencies, and what limits on their flexibility have been set? Charter agencies may keep money raised from the sale or lease of their agency assets. They may keep half of any appropriation dollars unspent at fiscal year-end as well as an agreed-upon percentage of any new money their agencies generate. They are exempted from across-the-board budget cuts in fiscal years 2004, 2005, and 2006.
   
   Charter agencies must submit each of their administrative rule waiver requests to the director of the Department of Management. The director of DOM may disapprove a waiver that has an “adverse financial impact on the state,” violates state or federal laws, or conflicts with collective bargaining agreements.
    
6. What do we expect them to accomplish? Charter agencies are expected to find new ways to deliver better value to taxpayers through greater convenience and efficiency. They are also being asked to generate more revenue and reduce costs.
    
7. What is the timetable? The six agencies that volunteered for this initiative signed one-year agreements, to then be renegotiated annually. Their progress will be evaluated annually. The flexibilities they use and outcomes they are expected to achieve will be developed during the project. Charter agencies will submit regular reports of results to the Iowa General Assembly.
    
8. Who is involved? Participating charter agencies are:
   • The Alcoholic Beverages Division, Iowa Department of Commerce
   • The Iowa Department of Corrections
   • The Iowa Department of Human Services
   • The Iowa Department of Natural Resources
   • The Iowa Department of Revenue
   • The Iowa Veterans Home
      
9. What is the Charter Agency Grant Fund? The Charter Grant Fund is a $3 million fund set up by the Iowa General Assembly to support innovation projects like training, improvement projects, development of outcomes measurement systems, or management system modifications. Dollars will be allocated to charter agencies by the Iowa Department of Management following an application process.
    
10. What impact will charter agencies have on Iowa’s collective bargaining agreements? The Charter agency initiative was developed with a clear understanding that terms of the state’s collective bargaining agreements would not be compromised. Good cooperation between the state and its labor unions will provide an opportunity for a productive collaboration.
     
11. How much will charter agencies save/generate over the five-year life of the charter agreements? The charter agency project is intended to benefit the state’s General Fund in the amount of at least $15 million per year for each year of the five-year project.
     
12. What impact will charter agencies have on Department of Administrative Services (DAS) operations? Both the charter agency initiative and the Department of Administrative Services’ “entrepreneurial management” business approach demonstrate Iowa’s strong interest in improving the efficiency and effectiveness of state government. Good cooperation and communication between the Departments of Management and Administrative Services will assure that each effort benefits from the experience of the other. Executive branch agencies, including charter agencies, are required to purchase services classified as “utilities” by DAS.

Questions asked by Charter Agencies after July 1, 2003:

13. How can Charter Agencies waive rules when the Supreme Court has said that rules have the force of law? Can we waive rules outside the waiver process in current law? We can waive rules because the Legislature said we can. That has the force of law. The Charter Agency provisions make it clear that Charter Agencies are intended to have special authority to waive rules, authority beyond the current waiver process.
     
14. Are the unions on board with the contract “side agreement” provisions? How do we square this provision with DAS’s status as the sole bargaining agent for the State? Please work with DAS as you approach any “side agreement” discussions and negotiations.
     
15. Can agencies renegotiate their Charter Agency financial commitments after the first year? And in subsequent years? Yes and yes.
     
16. What happens if a Charter Agency falls short of its annual financial commitment? On the spending side: As with any budget, the department bears primary responsibility for keeping spending within the budget. When a department has a budget problem, say overspending its budget, DOM works with that department to find a solution. On the revenue side: If revenues do not meet expectations, DOM will work with agencies to find a way to make up the difference. The possibility of falling short is one strong reason for having more than $15 million in commitments. A cushion will help us avoid problems. As it has turned out, at least $20 million has been achieved in each of the first two years.
     
17. There is an overall concern that when a Charter Agency saves or brings in revenue, the legislature will “take it out somewhere else.” How do we keep the legislature from in essence scooping the fiscal accomplishments of Charter Agencies? While there are no absolute guarantees, we expect legislative leaders will act in good faith.
     
18. Is there a need to communicate up-front with legislative leaders on where agencies are headed, e.g. using increased fees to hire new staff to provide better service? Yes. Communication with legislative leaders about plans (and results) is clearly the right approach. We intend to share agencies’ plans with the legislature and to keep them updated. We will do our best to avoid surprises. We will also try to be careful about expectations: positions funded by increased fee revenue will be dependent on the continued presence of the increased revenue.
     
19. Can agencies negotiate how much of fees go where? It depends. If statute currently directs the fees, then “no,” at least not until the statute is changed. If the fee is currently directed by rule or other mechanism, then the agency can negotiate changes.
     
20. What happens if the charter agency initiative falls apart in a year or two? Do they get the money restored? On a more positive note, we fully expect the initiative to succeed! If there are unforeseen problems, we will deal with them then.
     
21. If agencies exceed their revenue goals, can they keep the excess? Similar to the “fees” answer above, it depends. If current law allows an agency to keep or direct revenue, then “yes.” Otherwise, probably “no.” Agencies can retain the proceeds from the sale or lease of assets.
     
22. If an agency sells an asset and keeps the proceeds, do they lose half the proceeds that are unspent at the end of the fiscal year? No. The authority to keep proceeds from sale or lease of assets is independent. The authority to keep half of unspent funds refers to the amounts appropriated for the year.