Gov. Arnold Schwarzenegger has so many government reform proposals in the air that one wonders how he can keep track of them all. Among other things, the new governor is trying to overhaul education finance, completely remake the Medi-Cal system for the poor and fix a prison system rotten with corruption and abuse.

All of those initiatives are still in their embryonic stages, and their outcome will tell us much about whether Schwarzenegger is serious about reform or, like some past governors, loses interest when the going gets tough.

Schwarzenegger provided reason for hope this week as he put in place the first pieces of his California Performance Review, an ambitious undertaking designed to assess every government program from scratch while looking for ways to save money and serve the public better.

The project - which Schwarzenegger has described as "blowing up the boxes" on the organization chart, rather than simply moving them around - has drawn skepticism from insiders and observers who think they've seen this movie before.

Some doubters say the government is already about as efficient as it can become, that you simply can't save much money by changing the way the state does business. Others accept that there is waste and duplication in government but assume that the status quo will prevail in the end, that the system is more powerful than any governor's ability to overhaul it.

Perhaps. But Schwarzenegger sent a signal on Tuesday that he is serious about this task. He brought in a veteran waste-cutter from Texas, paired him with a California insider who should know where some of the bodies are buried, issued a call for help to every state employee and set an early deadline for the first round of findings from the effort.

Billy Hamilton, the deputy comptroller of Texas, comes with more than 10 years' experience managing performance reviews in that state. Hamilton, who will take vacation time from his Texas job to work as a consultant for California, also helped former President Clinton and Vice President Al Gore conduct a performance review of the federal government 10 years ago.

The seven Texas reviews in which Hamilton has participated since 1991 have generated hundreds of recommendations that have saved an estimated $12 billion in that state. The most recent review, released in January, included proposals for $1.7 billion in savings and new revenue for the state's general fund.

Hamilton will join Chon Gutierrez, a 30-year veteran of California government who has been an administrator and trouble-shooter for every governor since Ronald Reagan. Pairing a veteran California administrator with an expert from another state continues a Schwarzenegger habit of respecting the insiders in California politics and government even as he draws on new ideas from elsewhere.

The commission the two men lead will eventually borrow about 150 employees from throughout state government who will examine programs firsthand and review recommendations already made by the state auditor, the legislative analyst and the Little Hoover Commission, which is the state's permanent board for keeping tabs on the efficiency of government programs.

Gutierrez said he's looking for top-flight employees who have keen analytical skills, creative minds and the ability to write and meet deadlines. Beyond the core group, the commission will solicit ideas from rank-and-file state employees, academia and the private sector.

"The more out of the ordinary, the more creative, the better," Gutierrez said.

The reviewers will divide into 14 teams. Some of them will look at specific programs, say health care or education. Others will examine cross-cutting functions such as technology or procurement. They will develop a list of clear recommendations, the rationale for each and the potential cost-savings or benefit to the customer - the people of California.

While the group might eventually recommend changes that eliminate state jobs, Hamilton said the goal is not to "strip" state government of employees. He said some proposals might mean spending more in one area to save in another. Examples: prescription drugs that save on hospital costs, or new technology that cuts down paperwork.

The commission will complete its first round of recommendations by June 30. Hamilton, while acknowledging that the deadline is tight, said it is important for Schwarzenegger to capitalize on the political momentum still flowing from last year's recall election.

"There's a window on changing government," Hamilton said. "It opens and it closes very rapidly."

This isn't the first time the Texas comptroller's work has been used as a model for California. Former California Controller Kathleen Connell cited the same agency when she pushed for performance-based budgeting in the 1990s, but her efforts fizzled. Paul Miner, a deputy Cabinet secretary for Schwarzenegger, said this governor has made the performance review a top priority, and he won't let it slide.

"We are truly at a historic point," Miner said.

Let's hope so. Common sense and anecdotal reports from state employees suggest that significant savings are to be had if Schwarzenegger is smart about his approach and serious about creating a "21st century government" that can be a model for the nation. California's private sector has long been a leader in innovation - no reason its government can't do the same.