“We have multiple departments with overlapping responsibilities. I say consolidate them. We have boards and commissions that serve no pressing public need. I say abolish them. We have a state purchasing program that is archaic and expensive. I say modernize it. I plan a total review of government—its performance, its practices, its costs.”

-Governor Schwarzenegger

Governor Schwarzenegger has addressed the immediate budget crisis facing our state, but California’s fiscal outlook still shows signs of ill health. A recovering state economy will take care of a portion of the problem. Still, a budget imbalance is a symptom of more fundamental ills. Like a recurring disease, the state’s budget woes will persist until dramatic and fundamental changes are made.

When governments face budget problems, they typically resort to cutting services or raising taxes. Too often, attempts to cut services are random and unfocused. Too often, they don’t last. California is a growing and diverse state, and state programs must meet the needs of Californians.

The other tactic, raising taxes, doesn’t make sense today. The cardinal rule of medicine is: First, do no harm. California’s economy is recovering, and government should not limit the ability of the state’s people and businesses as they work for a better future. Private investment will help the state over the next several years. Californians expect the government to get its own house in order before dipping into their pockets.

The real problem is that the choice between higher taxes and cuts in spending is no choice at all. The excess in government isn’t necessarily in any individual program. It can be found everywhere within the structure of the government—built not into what government does, but how it does it.

There’s a better way. We can begin to eliminate the fat within the government, but we need to go a step further—we need to make permanent changes in how the state does business. Shedding the problems with the budget is like losing weight. You can struggle to lose pounds, but if you don’t change your eating habits, the weight will come right back. If government isn’t fundamentally changed, it will continue to experience the boom and bust cycles of spending and taxing with which Californians are all too familiar.

This is the mission of the California Performance Review (CPR). The Governor created CPR to bring him recommendations on how to fix what ails California government. And he asked CPR to go a step further: He wanted to create a state government able to meet the challenges of the 21st century. The concept is simple. A 21st century state government should be:

• Innovative
• Responsive
• Compact
• Open and accountable
• Performance-based
• Attuned to customers and employees
• Productive
• Pro-economy.

By making these principles part of every aspect of government, we will cure the basic ills California’s government faces today.

To complete its work, the CPR assembled a team of more than 275 state workers, academics and public policy experts. The staff was divided into 14 teams. These teams examined the key functional areas of government as well as issues that cut across all government operations and functions (Exhibit 1).

This report summarizes the results of CPR’s recommendations, and accompanying volumes detail all of the CPR findings. In total, the CPR is making more than 1,000 recommendations for the Governor’s consideration covering 280 issue areas.

Implementing even a fraction of these recommendations will dramatically improve the performance and productivity of California’s state government.

The recommendations of the 14 CPR teams were combined into seven topical areas as shown in Exhibit 2. These recommendations can help the state solve its pressing fiscal crisis. While not all of the CPR’s recommendations are intended to cut costs, many do. Total savings found by the Performance Review teams amount to $32 billion over five years.