Michael O. Leavitt Center for Politics & Public Service

Project Prologue

Instigation of the Department of Workforce Services in Utah

Department of Workforce Services

Introduction The real story of the Department of Workforce Services lies in its formation. This department combined four monster agencies each with their own political clout, with stake holders, community groups, businessmen, and stake holders. The department was up and working in a time period of only one to two years. The purpose of this report is to shed light on the formation of the department and the early days of its implementation. This is an account of its original foundation, its innovative design, its difficulties, the legislation involved, and the critical leadership of its founders.

I. Utah Welfare Reform Debate Utah took advantage of its opportunities to try new things in welfare. Late in the Bangerter administration the state of Utah had asked for initial waivers to pilot a program under FDC. At that time when President Clinton took over, the idea of demonstrations and waivers in Section 1116 of the Social Security Act [http://www.ssa.gov/OP_Home/ssact/title11/1116.htm ] allowed demonstrations of the welfare reform programs. The State of Utah was very aggressive in that effort. In fact, along with Wisconsin and a couple of other states they had some of the initial pilots of welfare reform. This is where Mason Bishop first got involved. In 1993 Mason Bishop was part of Leavitt’s original state administration in the Department of Administrative Services. He was there for about a year and a half when he moved into the Office of Family Support as legislative director. This was a large agency under the Department of Human Services. They operated all of Utah’s welfare programs including the Freedom from Debt Coalition (FDC), food stamps, general assistance, Medicaid eligibility, and other programs. Bishop’s involvement in the workforce reform debate originated from his work in welfare and welfare reform. Governor Leavitt was a big part of that involvement in welfare reform. When he started in January 1993 he was an early innovator of not only workforce but welfare reform. There is evidence of this from when he implemented the SPED program in Utah which was Single Parent Employment Demonstrations. There were several sites but the main one was in Kerns, Utah. There was a demonstration site and a control group. People were randomly selected to do the program as is and also do the program under the experiment. Essentially the features of this demonstration were that of an early form of work-based welfare reform. The demonstrations program was transitional and included job care, Medicaid, promotion of work, promotion of pay after performance, and mandatory work participation. Utah had all of this happening before the national welfare reform mandated these types of programs. Under Michael Leavitt’s administration Utah started getting a lot of recognition for its efforts particularly because their programs were work base as well as providing the right incentives to get single parents back into the workforce and getting them an education. These early demonstrations show Leavitt’s interest in workforce but it was after a report from legislative auditors that Leavitt decided to convene a workforce reform task force. The Job Training office was audited in 1993 and the reports showed Leavitt that there were many programs being duplicated that were serving the same population. Leavitt was not critical of the inefficiency of the staff, but of simply the way the system was set up creating these duplications. This was the reason Leavitt created the workforce reform task force. That observation from the legislative reports became Leavitt’s pivot point and got him to go to the legislature with the house bill that created the Department of Workforce Services. [https://spcoll.li.suu.edu/eadfiles/Xe1kcH8BnM5_0W5sJ69V/ms122NW19960120.pdf] II. Legislation and Improvements There were three major bills that put together the Department of Workforce Services in the 1996 to 1997 time frame. The first one came in 1996’s House Bill 375 which put together the frame work and created the transition year. HB375 created a skeleton and then it was the legislation and the development of the department that came later which created the real substance of the department. This bill was really Olene Walker’s bill. She pushed HB375 but it was her only involvement in the process. She had little to do with the bills that followed in 1997. Not long after HB375 passed, Bob Gross was appointed as the first official employee of DWS [https://spcoll.li.suu.edu/eadfiles/Xe1kcH8BnM5_0W5sJ69V/ms122NW19961101.pdf] as head of the new department. Gross’ leadership and management skills played an important role in creating the flesh of the department. There were a couple open-ended questions that the legislature compromised on after passing the initial bill. One question was whether they should carve out Vocational Rehabilitation and have it go independent or keep it in the department, as is. Vocational Rehabilitation was part of the department in HB375 but it became a major issue as people from the department fought against it. The legislature created an opt-out provision allowing them the opportunity to opt out of being a part of the new department by appointing statutory work groups to consider the issue and report back to the legislature with recommendations. Bob Gross, head of the department, would attend local meetings and at every single one there would be people from Vocational Rehabilitation saying they did not want to be a part of the new department. These people from Vocational Rehabilitation against staying in the department would bring people who were using their services to legislature and stakeholder meetings to put up a fight. The people they would bring would be people in wheel chairs to really extract some sympathy and, frankly, people who did not have all of the facts. Nonetheless it seemed that everyone was upset that the state was trying to change Vocational Rehabilitation when it was really working well outside of the new department. Thus, just before the 1997 legislative session started, the governor and Bob Gross sat down together and made strategical and tactical decisions and made the decision to jettison and let Vocational Rehabilitation be taken out. The other question was the same as the issue with Vocational Rehabilitation, but with the Industrial Commission. It was part of HB375 but many wanted to keep it outside of the new department so the legislature turned the decision over to the work groups. The work group for the Industrial Commission [https://spcoll.li.suu.edu/eadfiles/Xe1kcH8BnM5_0W5sJ69V/ms122NW19961101.pdf] was made up of 18 individuals: 9 representatives from business trade associations; and 9 representatives from organized labor. Bob Gross was statutorily appointed chair but had no tie-breaker vote. This work group had 11 meetings and still was not able to break the tie and come up with a recommendation. Meanwhile the Industrial Commissioners were behind the scenes lobbying like crazy to not come into the new department. They wanted nothing to do with it. They also had the business trade associations on their side. Larry Bunkell on the manufacturer was very vocal in opposition and Eddie Maine led the fight on the organized labor side. Because the work group could not come to a solution, the decision came down to Mike. The governor very skillfully and politically did not show his cards. Legislator Jeff Alexander sponsored a bill to take the Industrial Commission out. Bob Gross and Jeff Alexander sat down and Alexander wanted to know where the governor stood. Meanwhile the governor met with Dave Buhler, who sponsored the bill that actually took the Industrial Commission out, and they came up with another possible plan but the governor still would not show where he stood on the issue and which way he would vote. He told his staff on several occasions to just hold it and wait and see where it goes. He kept it that way until the last possible moment. During the legislative session, Leavitt asked Gross what he and Bishop wanted to do with the commission. Bob Gross stated simply that on a cost benefit basis it was not worth it to have it. The Industrial Commission was about five percent of the budget and it would have taken twenty percent of Gross’ time to babysit the politics. Leavitt responded, “Okay, it’s out” but then he did not tell anybody and continued to hold his cards. There were only two or three weeks left in the session and Mike capitulated by extracting some bargains from the manufacturers and business trade associations even though the decision had already been made and the amending bill to take it out was ready. Another major change occurred after HB375 had passed. An ad-hoc committee from the Office of Family Services came up with a unique plan for Utah’s reform efforts. The workforce reform task force had been started by the governor in late 1994 and early 1995. As the Office of Family Support became aware of Utah’s movement towards workforce reform Mason Bishop and others put together a small committee to get involved. Within this committee, they essentially decided that if workforce reform was going to be implemented in Utah, the Office of Family Support should be a part of that. This recommendation, which was published in the Salt Lake Tribune, was very unusual and unique because in most states welfare and workforce were working against each other. This committee’s idea was accepted and became an integral part of the environment in Mike’s administration. People on welfare reform were working towards education-based and work-based systems and the workforce reform discussions were occurring at the same time with the same ideas in mind. Everyone was moving together and everyone was moving forward. The combination of job services and job training with welfare created a distinctive partnership which was one of the many innovations of the DWS. Utah, under Leavitt’s administration, was literally the first state to do that. The 1997 session saw these changes and decisions come into law. The decision to strip out Vocational Rehabilitation and the Industrial Commission from the new department was legislated by Senate Bill 166 sponsored by Dave Buhler. SB166 [http://le.utah.gov/~1997/bills/sbillint/SB0166.htm] also provided an effective date of July 1, 1997 for the department. House Bill 269 [http://le.utah.gov/~1997/bills/hbillint/HB0269.htm] was the second one in 1997 which put to law the suggestion made by the ad-hoc committee consisting of Mason Bishop in the Office of Family Support to implement the welfare program into the new department. Both of these bills were results of the work and research done by the department as a skeleton. As it got moving different people and groups realized these changes needed to be made and so they were made in this legislation and added to the framework.  Another thing to consider is that in 1996, Utah was putting into practice two things at once. February 1996 saw the passing of HB375 and in August of 1996 the National Welfare Reform had passed. So during that time period between the state bill and the federal act the Office of Family Support was developing this department along the lines of the state statutes and also in anticipation of the federal government amending welfare on a federal state block grant basis. More state legislation in 1997 saw the department implementing even more changes in line with both federal and state policy and organizational changes. Also, the role of the legislation in creating the structure of the department is something that has been misrepresented. In the report done by Raylene Ireland [Making it Work, A history of the Department of Workforce Services, 1996-2004], it was implied that the legislature created 25 work groups. However, this is not so. There were two sets of work groups, one group created by the legislature and then the ones that came later after Gross’ appointment. The legislature created only 3 or 4 statutory groups. It was Bob and the go-to people on his team that came up with all of the other work groups. Gross’ team created more work groups because it was the goal to involve as many stake holders in the initial process as possible before it was designated what was going to be the new management team. The leadership skills used in doing this were very important and a big part of the legacy in Leavitt’s administration. III. Do Things Quiet and Do Things Right While making all of these changes in welfare and workforce, Utah also had competitors. As mentioned earlier, Wisconsin was another state that also was aggressive in its welfare reform efforts. Wisconsin was making a lot of hubbub about how they were going to go to the floor of Congress and have Clinton approve their waivers and their goals would be accomplished in this area. Because they were making such a big deal out of it they were getting a lot of notice as well. A meeting was held in Leavitt’s office where he and Bishop were discussing Wisconsin and they both felt that people really did not know enough about Utah and its welfare reform efforts. Leavitt said, “Let Wisconsin do their politics and Utah will just do things quiet and do them right.” This was an inspired piece of leadership on Leavitt’s part because he is very competitive but he realized the advantage that Utah had in being number two. The department was able to be built quietly under the radar. Despite being built under the radar, Mike still had to deal with the national politics. Nationally there was a new Republican congress that had only been in for a couple of years and a democratic president. There were huge national implications and federal agencies, partnerships, and programs. The department had to maneuver through all of that. Some of the federal agencies were at a senior career service level and there were some who were political appointees and did not necessarily want to make Tommy Thomas of Wisconsin and Mike Leavitt look great. Another major accomplishment in building the department was in getting random moment time sampling approved in 1996. Random moment time sampling was a way of proving eligibility to get funds from the federal government without having to keep track of time-consuming time sheets. This became a huge advantage to Utah over other states. DWS sent out a request for proposal and received bids from Arthur Anderson and some big consulting firms. Then a bid came in from these three guys out of Texas. Their bid was about fifty percent of what everybody else’s was but these guys knocked everyone down in their oral presentation. They did a superb job of putting it together with the finance people. Using this method, however, required approval from four federal partner agencies. DWS had to get Agriculture to approve it for food stamps, Health and Human Services to approve it, and Labor to approve it. After getting those first three, the toughest one was to get Office of Management and Budget (OMB) [http://www.whitehouse.gov/omb/] to approve it. OMB had the final pass, and it was done. The approval of the random moment time sampling is what made the integration of welfare into the DWS possible. Utah was the only state doing things like this. Tommy Thomas did not do this in Wisconsin. Wisconsin was running programs parallel but they did not try to integrate. Utah was the first on a state wide basis to integrate. Statewide, Wisconsin still had job training being locally operated and run completely separate from the job training. Another unique thing was done at the state level with this new agency in order to get it running effectively by July 1. There was a lot of pressure on the governor to get all these agencies ready to serve the people with their various needs and issues. If they did not get the services ready it would look really ugly in the media. All of the work and great improvements would be for naught if that deadline was not met. Making these changes and services accessible to the people became Mason Bishop’s job. Bishop had to work on yellow page ads and TV commercials with new names, logos, contracts, etc. Bishop had to go through stacks of yellow pages to revise the telephone numbers and names and logos. Then they had to advertise to convey the image of what the one-stop would be like. There was a lot of risk. If this had not been implemented right it would de-rail the entire project and also de-rail Leavitt in other things he would have wanted to do. One other thing that was happening quietly to get the word out came after Bob Gross’ appointment. He and his crew started making visits to every region. Mason Bishop put together a slide show presentation that was later referred to as the “Chamber of Commerce speech” because it was really used to the bone. This presentation was Bob’s talk that he gave to all of the employee groups and was very catalytic. The information communicated to these employee groups really got people thinking and got things moving. These talks were also intended to make people understand that this was not just a piece of legislation that they could ignore and derail simply because they did not like it. These talks made the changes real and helped inform all of the employees state-wide what needed to happen and where the department was going. Being a stealth department made organization somewhat difficult in the transition period. Because the department was not effective until July 1, 1997, all of these meetings and committees that are happening are on a stealth basis. People appointed to committees in the new department were still employees under their original department. Nonetheless, the period of transitional organization provided an opportunity for Gross to get know employees and try out a new management team. Gross created committees of committees. There was an HR committee, finance committee, Public Relations committee, and the senior person from each department served on those committees. The idea was that they be very transparent and very stakeholder involved. At time this was unwieldy but it was tightly managed and it worked. Gross pulled Bishop ahead of two or three people who were his seniors and made him director of Public Affairs. This was strictly Gross’ call and it was announced in October of 1996. One woman was really upset. She went to career services but Gross opinion was that she had a really bad attitude and did not really do anything. Even with these kind of repercussions, Gross did not let it stop him from making critical decisions with personnel. This is another example where both Gross’ and the governor’s political capital were being used. Bob’s team consisted of Barbara Givins, CFO; Greg Gardner, Deputy Director; Curtis Johnson, Deputy Director; Mason Bishop, Director of Public Affairs; and Rosemarie Carter, Administration Services. As discussed earlier, statutorily 3 or 4 work groups were created and then Gross created up to 25 more work groups. These work groups played an important role in getting the services ready for the people. The results of these work groups were developed into a designated service team of 25 employees of all ranks of the department. One day a week the work groups created after Gross’ appointment went off by themselves and took all the findings and recommendations from the preceding four or five months and came up with their recommendations in a written report. By April or May of 1996 these departments were created, created from senior executives to front line eligibility workers. They would off-site at least one day a week for about twelve weeks. Then they would meet with Gross and Bishop intermediately when they had problems. They were working toward trying to implement a one-stop with this newly integrated agency. Then they came up with what was referred to as the “Workforce Services Bible.” Later, people would challenge the implementation and said, “Your design, Bob.” He would state that it was their colleagues who designed it. He just gave a stamp of approval. The implementation of the new department with these work groups worked so well that it became operative in March instead of July. Thus, people could officially answer the phone and sign the letters as the Department of Workforce Services. IV. Leavitt’s Leadership Michael Leavitt’s characteristics as a governor were the most important tools in integrating the new department and for Utah to be able to make all the changes they were making in welfare and workforce reform. Leavitt’s unwavering support of his valued staff members is on such characteristic. One experience displaying this support was in dealing with the Department of Employment Security, also known as Job Service. This agency, led by executive director Floyd Astin, fought tooth and nail against the consolidation and inclusion of Job Service into the new department. After Bob Gross was appointed, DWS was looking for temporary offices to get started. Job Services volunteered their offices and Gross moved in on the sixth floor. Within a matter of days Gross was being told by people in Job Services that Floyd Astin issued a demand stating that nobody talks to Gross unless they go through Astin first. Astin was a very good person but very aggressive in working against the new department. There was a series of events like this so Gross went to the governor. Statutorily Astin still had to report to the Industrial Commission because the new department did not become effective until July 1, 1997. By the summer of 1996, Gross went to the governor and stated Astin was a problem and the department needed to move him out even though technically Astin did not report to the department and thus Gross did not have that kind of authority. The governor said, “Do it.” Meanwhile Astin went to Gross and said that he thought he would retire at the end of the year. Gross told the governor that he felt he should be taken out immediately and put in the position of special counsel for the transition. The governor approved the move and so Gross did it. In response Astin went straight to the Industrial Commission who all became very upset and caused a lot of trouble. They did not cause the trouble directly to Gross, but did it through the manufacturers’ work group led by Larry Bunkell that was mentioned before. At a public meeting which the media was invited to, Larry Bunkell said, “Mr. Gross, aren’t you a lawyer?” Gross said, “Yes.” Bunkell said, “Do you have the statutory authority to ask Floyd Astin to step aside?” Gross stated simply that he had the governor’s support. In a recent interview, Gross stated, “I just played dumb. I played like ‘maybe I do, maybe I don’t but I’ve talked it over with the governor and we think it’s the right thing to do.’ The governor could have backed down from that but he did not.” That personal support that Leavitt gave was extremely valuable. Another aspect of Leavitt’s governorship was his ability to push through difficult problems. There were several things that happened in developing the new agency that could have slowed down progress and made completion impossible. Mike broke through these log jams and gained the most out of the situation. One example was with department service delivery. It was undecided whether it was going to be structured through a state or county system since there was resistance from county commissioners on the entire structure. Mike met with county commissioners in August 1996 and got the problem taken care of. Another example was discussed earlier with whether or not to keep the Industrial Commission.
In this situation Mike considered all of the options and then made a choice and stuck to it. Leavitt’s leadership and insight in overcoming obstacles was also important. Making the transition deadline was difficult because of the many different hurdles which the governor had to move over. That deadline would have been impossible to make without the governor. Leavitt had to deal with a multitude of issues at all different levels: federal reforms, agencies, and politics; the state’s local governments; the tension between the sister agencies (Job Service verses Office of Family Support verses Job Training); and then the people of the state with their political opinions. It is a major public policy case study. The interest groups involved are businesses and employers, unions, state employees, federal employees, OMB, legislators, community advocacy groups, disability advocacy groups. There are all these tremendously different and challenging interest groups to maneuver through and somehow it all got done. They had to please so many different groups. Once the bill passes then all they had was the spring to get this operational by July 1. All these agencies and advocacy groups would be picketing and protesting if they were not getting their services come July 1. One criticism that people had of Michael Leavitt as governor was that he never used his political capital. According to Gross, this is not so. “He used his political capital all the time,” Gross states. Many governors who launch a huge initiative like this would try to find scapegoats any time it starts going south however Leavitt would never do that. Every day that the department was functioning he was expending his political capital. This is evidenced in an experience Gross had with Jeff Alexander. It was the first time Alexander and Gross had met and Alexander asked Gross if they had a budget. The truth was they did not and Gross told him that. There were six agencies’ budgets and the plan was to consolidate those. Alexander really dug into him for not having a budget and the situation became very tense. The governor told Gross that he should not worry about it; just keep going. The governor’s response displays his move-forward mentality which was really important in his leadership. The situation also shows that people were not always positive about what Leavitt was doing and he was aware of that but that was the price he was willing to pay. Many people recognized the great things Utah was doing with Leavitt as governor. While many of his staff were visiting in Washington D.C. people would ask them how they accomplished the DWS. Mason stated, “It starts first with, number one, you have to have the governor. The number one reason this got done was that Mike Leavitt was governor and he had the will and the ability to e supportive and see it happen.” Another example is when Rod Haskins, senior fellow of the Brookings Institution came to Utah to look at the department. At the time he was senior staff member for the House Ways and Means Committee during the period of welfare reform. When Haskins saw Utah’s department, he really appreciated everything that it took to put it all together.  The press came to Rod and asked him what he thought of what was happening. He said, “This is the Mercedes of the system.” Yet another important decision made by Leavitt was in his appointment of Bob Gross. What made Gross so significant was that he was a non-vested interest and that he was a business leader, a former bank CEO. Honestly, Gross did not know a lot about the programs in the department, but he did know the system. It took the tutelage of Bishop to teach him about the AFDC [https://www.cppa.utah.edu/publications/welfare/Tracking_SLCounty.pdf] , Caniff Program, welfare, food stamps, etc. Employees saw a third party, someone pulled in from neither side of the department. Gross was a non-vested interest so when he made a decision people in the department could not make excuses that he was biased or for or against any of the parties involved. As with any merger, people within the agencies were keeping score. Had Mike chosen someone else with that tinge of bias it could have caused just enough friction to prevent the department from being able to work together, and also caused enough problems to discourage lawmakers from going through with it. The appointment of Gross appeased many legislators’ concerns as well. Legislators saw someone who would understand things from a private-sector perspective. By appointing Gross, Leavitt showed legislators that this is how he wanted things to be done- in a private-sector way. Mason Bishop wrote an article in the Provo Daily Herald about how this appointment was not getting a lot of publicity but had one of the greatest public ramifications at that time. Mike built up a lot of credibility with those of his own party who were lukewarm about the new department or those who were opposed. This credibility stuck with the department for about six years. The timing for Gross worked out really well. His bank had just been bought out by Wells Fargo, and from what he saw of Wells Fargo, he knew he did not want to stick around. It has since improved since they were bought out by Norwest, keeping the name Wells Fargo, but at the time Gross knew he did not really want to be a part of it. When Wells Fargo found out he was considering other job options, they sent two men out from San Francisco to try to convince Gross to stay. He had already scheduled meetings with Olene and Mike over the next few days. His mind was already decided and the timing was perfect. Having the correct person for the job was critical to get this agency off the ground. It was another key leadership moment for Mike. Michael, having worked in the private sector, recognized the benefits in people who understood that. Many people in government have never worked for the private sector. There is a misgiving about somebody coming in from the private sector who was a CEO. Bob was able to command that respect. There was an aura about a person from the private sector coming into this. There was a bit of intimidation and uncertainty. In addition, Gross has a fairly strong personality. The first two weeks Bob was there they flew to every region and Gross was face to face with every employee. Gross was confirmed by the Senate in a special session in April and he had gone out and seen all the state employees by the second week in May. These visits started the first week in May and by the second week they had seen every region. Gross went straight to the people to make sure they understood where he stood and where they were going. V. Major Issues After Operative Date After implementation in 1997, going into 1998 there were still some issues that needed to be worked out. Three major ones were: one, how are services going to be delivered to the public; two, how to bill federal and state funding sources and how to get agreements across programs, across federal agencies, and with the state legislature to agree to a budget matrix; and third, how to get the word out to the public so they do not go to show up to an old Job Service Office that may have closed because it was decided to have the one stop be at the old welfare office. In dealing with the offices, this consolidation that was occurring was very important. Each community had to be looked at to decide if offices should or should not be kept open. More than fifty percent of the offices were closed or consolidated but every community that had a presence, kept a presence with the exception of one in Manti or Ephraim. Other than that every community which had an office kept an office but they still effectively unified all the offices of services. Even one office which was closed was owned by the governor’s father. How to deliver services is also something that had to be worked out over time. All of the personnel from the old offices by law were guaranteed a job in the new department. Originally, what Mike wanted to do with the employees was create super-workers to deliver services. His vision was that any person up front in the office would know the ins and outs of whatever services a person coming in would need whether it be welfare, job training, food stamps, etc. Leavitt was not familiar enough to know that this would not work because of all the federal regulations that really burdened them. Instead of the super-worker, what was actually done was more of a super-team. Within each office there were different teams who each had their own expertise. Each team would rotate to be up front in the office. This method of service delivery was much more realistic. VI. Conclusion This is how the Department of Workforce Services began. The foundations were certainly a work in progress. The innovative combination created in the new department was the result of the integral leadership of many people and the meaningful input and cooperation of their early employees.

Michael O. Leavitt Center for Politics and Public Service