Cutback Management

As a student of government looking back on the 1970's, it appears as if there was a transition of the public sector from a "do anything at any cost great society affluence era" at the beginning of the decade to a "do more with less era of limits," at the approach of the 1980's. Government's role as "great overseer" grew greatly during the Great Society era of the 1960's. Intergovernmental aid (in the form of block and categorical grants) and Headstart are examples of programs administered by the "give all" generation of bureaucracies and legislators.

The Regan revolution brought major reductions in federal domestic spending, including additional cuts in financial assistance to the states. President Regan's hiring freezes and shifts in funding priorities were undoubtedly intended to reduce waste, improve productivity, and decrease aid for programs.1 Before the shifts, it was commonplace that government was recession-proof employment. Those fortunate enough to go work for a government entity, once past the probationary period, could count on employment for life. While others in the private sector may have found themselves facing layoffs, government employees were busy greeting new co-workers. In fact, in many jurisdictions, governmental payrolls were growing as those in the private sector were shrinking. This employment largesse came to an end during the 1980's when the federal government began to step back from its increasing financial involvement in urban and local areas. Regan began to mandate programs for states to implement without allocating the funds necessary for implementation. Coupled with an economy which saw an increase in unemployment resulting in a reduced tax base, governmental agencies began to experience massive revenue and cost dilemmas.

Reganomics was a political period characterized by growth, slowdown, zero growth, and absolute decline all at the same time. It sparked bitter conflict by decreasing the prospects for innovation by consensus and complicated the process for building and maintaining a support for administrative systems and democratic processes. Nothing is more symptomatic of this conflict than the successes of Proposition 13 in California. As a result of increased resource scarcity, citizens wanted to trace their own well-being as individual tax payers to specific government services, to alleviate the impact of inflation on their personal disposable incomes, and backlash against the salary increases of unionized public workers and the services offered to the poor minorities.

During the mid to late 1990's the United States witnessed the largest economic boom in America in the last forty years. A new catch word for government programs emerged, which was reform. Although this method was not an urban save all it did provide a significant turnaround from the limited government rhetoric that was embellished during the Regan/Bush years. The Clinton administration saw the economic dilemma facing many urban areas and put administrators in positions that were familiar with the urban setting and could assist. Shrewd tactics, coupled with urban economic incentives and low unemployment rates saw the economic progress desperately needed. However, as a new century is entered a new administration is in office once again speaking of limited government. Add the events of September 11, and certainly new challenges will be facing administrators as program budgets will be cut if not wiped out all together. The current economic recession (whether its official or not) has people calling for cuts in all areas. The period of hard times for government managers will require cutback management, tradeoffs, allocations of organizational contractions, program terminations, sacrifice, and the unfreezing and freezing of grants and privileges that have come to be regarded and nonnegotiable rights, entitlements, and contracts. It is a methodology that desperately needs to be addressed-the methodology for what is known as "cutback management".

The purpose of this paper is to define cutback management, discuss the causes of organizational decline, offer some solutions and tactics on how to successfully act as a manager dealing with resource scarcity.

Cutback Management is to manage organizational change toward lower levels of resource consumption and organizational activity. Cutting back an organization involves making hard decisions about who will be let go, what programs will be scaled down or terminated, and what clients will be asked to make sacrifices.2 These are tough problems that are compounded by four aspects of resource scarcity. First behavioral scientists have demonstrated that change is most easily accomplished when the people affected have something to gain, but under conditions of austerity the acceptance of change will be unlikely because the rewards required to gain cooperation and build consensus will be unavailable. The reasons for this is that in a number of instances, governments have chosen to reduce their work forces through layoffs. Doing so has resulted in immediate apparent savings, but has also resulted in costly side effects which have not been fully counted and thus are not fully needed in decision making. Second, public organizations are confronted with professional norms, civil service procedures, veteran's preference, affirmative action commitments, and collective bargaining agreements which constrain the ability of management to target cuts. As with most issues of public management involving distribution of costs, the choice of decision rules to allocate cuts usually involves the tradeoff between equity and efficiency. This is probably the most difficult strategic choice to make in the cutback process. Equity is meant to mean the legal and practical basis for distributing public services and distribution of cuts across the organization with an equal probability of hurting all units and employees.3 It should be irrespective of impacts on the long term capacity of the organization. Efficiency is a process-oriented concept that assesses how inputs are converted into outputs.4 As it relates here it is the sorting, sifting, and assignment of cuts to those people and units in the organization so that for a given budget decrement, cuts are allocated to minimize the long-term loss in total benefits to the organization as a whole.

The dilemma stems from both the cost of delivering services to different populations and the composition of the public workforce. The most dependent parts of our population-minorities, the poor, the handicapped, and the aged are often the most costly to serve. Blind cost-cutting calculated on narrow productivity criteria could do immense harm to them. This dilemma is also compounded by the recent rises in minority public employment and the