Reynolds reshaping Iowa state government

DES MOINES — Iowa’s state government could soon look decidedly different from it did when Gov. Kim Reynolds first took office in 2017.

The Republican governor has signed into state law many conservative policies on taxes, elections and abortion restrictions, and during her tenure state lawmakers and voters embedded into the state constitution expanded gun rights.

Now, Reynolds is changing the shape of state government itself.

She is proposing to restructure state government by streamlining the number of cabinet-level state agencies from 37 to 16. And, by executive order, she has placed a four-year moratorium on state rule-making, the process of adding detailed rules to implement newly passed state laws.

“Like any large organization, government is marked by bureaucracy’s natural tendency to grow. If that growth isn’t constantly checked and rechanneled toward its core function, it quickly takes on a life of its own,” Reynolds said this past week in the governor’s annual Condition of the State address.

Streamlining government

Reynolds’ proposal to cut by more than half the number of cabinet-level state agencies will require legislation, which may be introduced as early as this week, her office said.

The proposal would continue an effort already underway by Reynolds to reshape state government. In 2019, she made Debi Durham the director of both the workforce development and low-income housing departments, and in 2020 made Kelly Garcia director of both the human services and public health departments.

Last year, Reynolds proposed merging the former state human services and public health departments; that merger now is in a multiyear process of being affirmed in state law. The new Department of Health and Human Services affects hundreds of thousands of Iowans, including those on Medicaid.

“It’s been nearly 40 years since we’ve undertaken a comprehensive review of government operations and structure. And frankly, it shows,” Reynolds said. “The result is unnecessary friction for Iowans, with services spread unpredictably across state government. …

“I have a great team of directors, who are served by thousands of capable, hardworking public servants who care deeply about delivering for Iowans. I’d put them up against any state in America,” Reynolds added. “But that talent can’t meet its full potential when it’s hampered by a fractured organizational structure that’s run on Autopilot for decades. We can do better for Iowans.”

Reynolds said Iowa’s 37 executive branch cabinet members is significantly more than neighboring states and other states with similar populations and state budgets.

However, that number includes not just state department heads, but also heads of state boards and councils. It’s a broad group of employees that extends beyond state departments, including the heads of appointed boards including the Iowa Utilities Board, the Iowa Lottery Authority, STEM Council and the Division of Banking.

Reynolds’ office provided a flow chart of 38 state government agency positions under the governor’s control. It includes the Department of Commerce, although the governor’s office said it does not count Commerce Director Katie Averill as a cabinet member.

Including just department heads, Iowa has 17. That is closer in number to cabinets in neighboring states and those with similar-sized populations and state budgets — with the exception of Illinois — which range between 15 and 27, according to the Council of State Governments. The council lists 30 Iowa cabinet members, including the governor.

The Kentucky-based nonprofit is the nation’s largest nonpartisan organization serving all three branches of state elected and appointed officials.

The governor’s office did not provide specifics as to how it would merge or realign cabinet-level departments, stating it would release more details once legislation has been introduced.

The governor, however, provided a broad outline in her proposed state budget for the state fiscal year that starts July 1.

The proposal seeks to centralize similar programs that exists across several agencies into a single department “with the resources, experiences and subject matter expertise to achieve the best outcomes for Iowans.”

Reynolds proposes:

Reynolds’ staff said the governor’s restructuring proposal can be accomplished without laying off a single state government worker, although the plan will include not filling some currently vacant state government job openings.

The size of Iowa state government has grown steadily over the past two decades, according to state data, from just more than 46,000 full-time workers in 2005 to nearly 56,000 in 2021. The number of state workers has risen annually with exceptions in 2010 and 2011 — on the heels of the recession — and in 2020, during a pandemic.

Republican leaders in both the Iowa House and Senate said they’re generally supportive of the proposal, but note they will reserve judgment until they see the actual bill.

“I think the Department of Human Services and (Department of) Public Health merger has shown us that there’s a path for us to be able to do this when we have good people at the helm with making sure we can accomplish that,” said Iowa House Speaker Pat Grassley, a Republican from New Hartford. “We’ve already proven (with) one of the larger organizations in state government that can be done, and I think that that’s really been a good road map we’ll be able to follow. So I think there will be support in the Legislature to support that.”

Senate Majority Leader Jack Whitver, a Republican from Grimes, echoed Grassley.

“Sometimes it doesn’t make sense where different departments are located, and so to take a holistic look at that is something that is needed and I’m excited that she put some effort into it,” Whitver said.

Democratic state lawmakers said they want to see Reynolds’ proposal to ensure Iowans’ lives will not be disrupted by the process. Zach Wahls, leader of the minority-party Senate Democrats from Coralville, said the state should exercise caution — citing the state’s 2016 transition to private management of its $6 billion Medicaid program.

“It’s the beginning of what will be a very long conversation. … Government reorganization bills always take many years, a lot of work, a lot of effort. It’s not something that should be done willy-nilly,” he said. “Reorganization bills should be done carefully, deliberately and most critically in a bipartisan way. The fact that this is the first time that I think either Democratic leader heard about this (during the Condition of the State address) doesn’t send a lot of good signs about what’s to come on that effort.”

Rule-making pause

Reynolds’ executive order places a four-year moratorium on state agencies drafting new administrative rules and also directs state agencies to conduct a cost-benefit review of every rule and regulation they have on the books and to evaluate whether there are less-restrictive alternatives.

“Iowa’s Administrative Code contains over 20,000 pages and 190,000 restrictive terms, putting undue burden on Iowans and the state's economy, increasing costs for employers, slowing job growth and impacting private sector investments,” Reynolds said.

Lawmakers said the moratorium is not expected to impact rule-making resulting from new laws passed by the General Assembly.

“When it’s all said and done, Iowa will have a smaller, clearer and more growth-friendly regulatory system,” Reynolds said during her Tuesday address.

The Iowa Administrative Code is updated every two weeks, year-round. The current page count for the Iowa Administrative Code is 20,285 pages, nearly 10 times the volume when the modern code was established in 1975, according to the nonpartisan Legislative Services Agency.

However, the number of rules in the Iowa Administrative Code have decreased by an average of nearly 100 rules a year over the last roughly five years. There are currently 24,881 rules in the Iowa Administrative Code compared with 25,356 as of Feb. 1, 2018, according to the agency.

“The numbers indicate that in the last five years, more rules have been rescinded than added,” said the agency’s Jack Ewing.

According to the Mercatus Center at George Mason University, which gathered and analyzed the regulations of 46 states plus the District of Columbia between June 2015 and August 2019, Iowa had 160,000 regulator restrictions based on the number of occurrences of the words and phrases “shall,” “must,” “may not,” “required” and “prohibited” in each state’s regulations.

Iowa ranked No. 10 in terms of having the most regulatory restrictions. South Dakota had the least restrictive regulations, with almost 44,000 restrictions. Alaska, Arizona, Idaho, Kansas, Montana, Nevada and North Dakota are other states with fewer than 75,000 restrictions. Sixteen states had fewer than 100,000 regulatory restrictions in their administrative codes.

“I think it’s a great idea. I had a bill two or three years ago to do something very similar,” Whitver said of Reynolds’ rule-making moratorium. “Because, again, over time rules just continue to add up. And very rarely do you go in and take a hard look at which rules don’t make sense anymore. I believe if we continue to pass new laws that include the rule-making process that would still be allowed. But, I think we should continue to look at all the regulations in the state of Iowa.”

Rep. Megan Jones, a Republican from Sioux Rapids, said she was excited by the governor’s proposal. Jones will become chair of the legislative panel that reviews proposed state government rules and regulations in February.

“I think a lot of people forget about the administrative code, right?” Jones said. “We have the statutes, and so people will do their due diligence in looking up laws and the statutes, but then forget there’s another piece to that puzzle” in the administrative code.

Some issue advocacy groups, however, are not as excited.

Wally Taylor, with the Iowa chapter of the environmental advocacy organization the Sierra Club, disputed many of the claims made by Reynolds in her executive order, including that state rules and regulations are costly to employers and inhibit economic activity or growth, or that they create a burden to Iowans.

Taylor said while Reynolds’ executive order aims to “create a more stable regulatory environment and provide businesses with certainty,” he said the order does not consider the impact on Iowans’ lives.

“It is all about protecting business,” Taylor said. “Sierra Club’s position, at least as to the rules we regularly deal with, is that many of the rules are too favorable to business and should be strengthened. The governor’s order appears designed to do just the opposite.”

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