Two decades later, while serving on Defense Secretary Donald Rumsfeld's financial management reform task-force, he learned how resistant Congress and Pentagon bureaucrats are to any changes in the way defense budgets are cobbled together.

He also tried bringing government efficiency to Chicago's government as the city's budget director during a fiscal crisis, by reforming the budget process and laying off workers. After he left, that effort ended when voters kicked his boss, Mayor Jane Byrne, to the curb. The lesson: "There was a price to be paid for laying off precinct captains."

Which is why Haider thinks such government reform plans as those proposed by Indiana Gov. Joe Kernan and his Republican challenger, Mitch Daniels, face long odds. After all, "public officials have a limited amount of political currency."

Yet as proven by Wisconsin's welfare overhaul – the model for the federal-level effort – and Florida's efficiency efforts, government reforms can be achieved. The secret of their success? A governor who devoted the earliest days of his term to the effort, a clear set of objectives, an open process that included all players – including the very bureaucrats who can bog down such efforts – and the creation of a performance management system.

The next governor must apply those lessons to accomplish reform. His objectives must also go beyond eliminating waste and corruption. Deciding on what efforts government should concentrate on and what it should leave to the private sector must come into play.

With 74 agencies and 319 different boards, including the 41 that oversee the Family and Social Services Administration, Indiana state government could certainly use an overhaul. That can be seen in the state’s more than $800 million budget deficit. A spate of fraud and identity theft at the Public Employees Retirement Fund, child deaths in cases handled by the Family and Social Services Administration and the morass at the Bureau of Motor Vehicles also are evidence of a government running on empty.

Such corruption and incompetence don’t merely affect state government affairs. The botched six-year revamp of the property tax reassessment rules, along with delays and errors at county and township assessment levels, have led school systems such as Indianapolis Public Schools to borrow money to stay afloat. That an agriculture-related firm, for example, has to deal with at least two different agencies for permits and rules compliance also makes the state unattractive to new companies as well as existing firms. And taxpayers will face an even greater challenge as the state must eventually cover $8.2 billion in underfunded civil servant pension benefits.

Republican Daniels has offered a reform package that includes splitting off FSSA’s child welfare functions and combining the agency’s job placement and training functions with the Department of Workforce Development.

 Kernan rolled out his own set of reforms last week, including consolidating government into nine cabinet-based departments, replacing township assessors with a county-based system, eliminating a third of sate agencies and splitting FSSA into four agencies.

Kernan and Daniels aren’t alone in their plans to reorganize government. Efforts to revamp financially strapped state governments in California and Illinois are under way. In Indianapolis, Mayor Bart Peterson has proposed a plan to eliminate much of township government. Merge the two largest police agencies and combine fire departments.

Yet, if the past is any indication, such efforts will face significant obstacles. And they may produce limited success even if completed. On the federal level, neither the Grace Commission nor former Vice President Al Gore’s Reinventing Government initiative did much to slice down the federal bureaucracy. In Indiana, then-Gov. Evan Bayh merged agencies to form FSSA in 1991. The idea was to promote efficiency and improve services. Thirteen years later, both Daniels and Kerman want to break up the giant agency.

Why not more success? Many reform proposals are born during periods of fiscal crisis and focus simply on budget-cutting instead of full-fledged improvement. Those efforts are often abandoned once financial conditions turn around. Bureaucrats, rival politicians and public employee unions also are often resistant to change and will stall efforts until they peter out.

To have the most chance for success, according to Geoffrey Segal, a director of the Reason Public Policy Institute, a governor must set his agenda for reform within the first 150 days of his term.

So the next governor should follow the lead of Florida Gov. Jeb Bush, who immediately set an objective of not simply cutting government spending. Instead he pushed for a “best value” approach in which productivity was evaluated. The goal was to achieve more results even if the same numbers of tax dollars was spent.

To give reform efforts credibility – and make them easier to sell – the governor also should include in the decision-making process the very groups most likely to fight change. While Gov. Arnold Schwarzenegger’s California Performance Review was largely influenced by Reason, it also sought advice from businesses, citizens and state employees.

A performance measurement system, guided by objectives, must also be put in place. Such a model can be found in the federal Program Assessment Ratings Tool, created during Daniels’ term as budget director. Programs such as the National Weather Service are measured by outcomes such as the accuracy of hurricane forecasts, as well as comparing them to similar operations. The result: Some 122 programs are either on the chopping block or targeted for spending cuts, while others such as the Wild Land forest firefighting program may see increases in funding.

Can reform, as Chicago Tribune editor Michael Tackett once opined, be another word for nothing left to lose? Sure. But it doesn’t have to be that way. And if the next governor applies the formula correctly, taxpayers will have plenty to gain.

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