City Panel Working to Tighten Scrutiny of Taxpayer Dollars

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from city flyer sent out in April featuring 2013-14 budget breakdown.
from city flyer sent out in April featuring 2013-14 budget breakdown.

By Jeff Miller and Dan Carson

Last February, Davis Enterprise columnist Bob Dunning mused on the city’s serious fiscal problems and controversies, and suggested a solution. “Maybe it’s time to convene a citizen-based Budget Advisory Commission to turn over every rock looking for spare change that could get us out of this mess,” he opined in a column titled, “Thorough Review of City Finances In Order.”

Maybe he was unaware of the longstanding existence of the city Finance and Budget Commission.  Or maybe he was just offering a playful critique of our work.  Either way, he raised a legitimate concern that this city needed a more active and engaged city commission to help find budget solutions and to caution against unwise expenditure of taxpayer funds.

As, respectively, the chair and vice chair of that commission, we wanted to alert you and Davis citizens to our recent efforts–taken in coordination with the Davis City Council and city staff–to energize our commission, better define and organize our activities, and provide more comprehensive and careful scrutiny of city finances.  We have a lot of work to do to improve our effectiveness and relevance, but our six commissioners have been trying hard to represent the concerns of Davis taxpayers and citizens who want their dollars used frugally and effectively. Many Davis citizens don’t have the time to delve into the details of city finances every quarter, but want the assurance that an independent party is reviewing the details.

After soul-searching discussions with the council and city management about the role of our commission, including a joint public workshop, we adopted a resolution in May (subject as always to discussion with the City Council) creating a system of commission subcommittees, and assigned specific tasks to each.

Because of our belief that the key to building citizen trust in government is accountability and transparency in city finances, the first subcommittee we created will focus on accomplishing those goals. Specifically, our resolution directed this first panel to draft a new and updated mission statement for the commission to submit to the City Council for its consideration.

It also directed this same subcommittee to work to foster the development of a new city accounting system that would make it easier to understand how the city is spending its limited resources. We believe an improved accounting system could allow city staff to produce the budget and related documents at less time and expense and give Davis policymakers and average citizens the tools they need to analyze city spending and revenue trends and identify potential budget solutions.

We also want to analyze key components of city finances in a systematic way over time–areas such as employee pensions and health benefits, major departments such as police and fire, and so on–to better predict what must be budgeted for these purposes and to develop new budget solutions. For this reason, we created a second subcommittee that intends to develop and initiate a process for a zero-based or similar review of selected city expenditure areas. The main idea is to go beyond a review of the most recent marginal changes in city programs that are proposed each year in the budget process to gain a more in-depth understanding of core city programs and how they might be reformed or constrained.

This city stands at a crossroads in deciding how best to tackle the backlog of deferred maintenance and infrastructure needed to continue the effective delivery of public services to city residents. Accordingly, we created a third subcommittee that has been directed to examine the projects for these purposes identified by city staff and to review and to comment upon a plan that we anticipate city staff will develop to address and finance higher-priority projects. We stand ready to work with city management, the City Council, and the other relevant city commissions who oversee infrastructure systems in ensuring that the city takes a fiscally prudent approach to this complex undertaking.

As we complete some of these tasks, there are additional projects we plan to undertake. Some City Council members have encouraged us to help model the potential costs and benefits to the city of various pending economic development proposals, such as the “innovation” business parks, the Gateway/Nishi project, and the new convention center and hotel complex. We also look forward to examining ways to use available assets to enhance the city’s fiscal situation, such as through the sale or lease of city property or the operation of concessions or franchises with private-sector partners.

We are already moving from discussions of commission process to action. We peppered city staff with a lot of questions about the justification of city expenditures and other budget assumptions during the 2014-15 budget process. Prior to the adoption of that budget plan, we reviewed and successfully advocated for City Council adoption of $1.2 million in additional budget cuts proposed by the city manager to help erase a $5 million structural budget shortfall. In July, we asked city staff to prepare a multi-year accounting of the outcome and status of over $80 million in capital outlay projects that were proposed by City staff and approved by City Council in recent years because that detail is not included in the annual budget report.

We recognize that our authority as a commission is limited. We are an advisory body, not a decision-maker. We are dependent in many cases on the availability of limited staff resources to get answers to complex questions. Nevertheless, we are hopeful that our new subcommittee structure will provide us the flexibility and decision-making structure to give the citizens of Davis the greater scrutiny of the use of their tax dollars that they deserve.

Please help us succeed in our work. We welcome public comments at our meetings, usually held the second Monday of each month at 7 pm in the conference room in the back of the City Council chambers. We are next scheduled to meet on September 8. And, if you have the qualifications to help with these tasks and are a Davis citizen age 18 or older, there is still time for you to apply for one of the two current vacancies on the commission before this Friday’s deadline. (A link to information about the city’s commission application process can be found here.)

Jeff Miller became chair of the Finance and Budget Commission this year and has served on the panel since 2009. Dan Carson was appointed to the commission in January and is now vice chairman.

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6 thoughts on “City Panel Working to Tighten Scrutiny of Taxpayer Dollars”

  1. Frankly

    Some of the most important work lacks glamor and is done in the basement. Like constructing a house, people comment on the elevation and interior design, but the foundation and plumbing needs to be hidden out of site and taken care of with minimal fuss.

    But if you have problems with your foundation the house can fall down. And plumbing leaks can ruin the entire structure.

    Citizens need to start paying greater attention to the financial foundation and plumbing of the city. The streets, parks, programs and services are just the facade. We naturally care more about these things, but they will disappear without the money to support them.

    1. jeff

      DP
      Legitimate question. I have been a member of the commission for the last 5 years and recently took over as chair a few months back. Rather than rehashing the rather moribund past relationship between F&BC and the CC I believe things are improving. The CC’s active role in soliciting and interviewing applicants followed up with the new appointments is real change. To your question
      “my first question is whether this is an audit or simply reinventing the wheel that has gone on for the last five years?”
      I would say the answer is a combination of both. Both are desperately needed, IMO. The data we as citizens deserve to see and review, for the most part exists. Digging it out of an antiquated software system, green screens for those old enough to recall, is possible but the staff time required to provide it with current staffing resources is not practicable. It is not an audit we are looking for in an accounting sense, we get a Comprehensive Annual Financial Report, CAFR, albeit at least a year after the fact, every year. Reflecting on the CAFR versus the proposed versus adopted budgets staff and CC agree on is another more than complex task. The first request we are asking the CC is to direct staff to provide an accounting of some $80 million Capital Improvement Projects that apparently were done but without any of the expected normal reporting of the proposed costs versus actual costs, including inter/intra revenue funding.
      I also believe we need to reinvent our wheel. If we bring in a new CM and he/she continues the budgeting and reporting process as we have in the past, I suspect we will end up with similar results. Or, next year or the year after we will be listening to staff and CC as to why we need to cut more services or increase taxes. So, yes we need to think outside the box including at least contrasting the cost of outsourcing services versus our staff providing those services as well as looking at the other spokes in our wheel.
      It is not the F&BC’s role to promote or advocate city policy. Staff proposes the services and projects they intend to provide for specific dollar amounts in the proposed budgets each year. The CC then approves or modifies those budgets, which becomes the adopted budget. We are proposing that the F&BC be charged with monitoring this adopted budget on a quarterly basis and begin the process of defining metrics with the staff so that we can also determine what services and projects were provided and how much it actually cost the city to provide said services and complete the projects. From that point the CC, as well as the citizens through their votes, can decide if the costs are acceptable.
      Jeff

  2. hpierce

    One of the things the Commission should do is evaluate the total estimated costs of developing and implementing a new accounting system, and then justify those costs with a dollar benefit that they expect to achieve, PRIOR to making a recommendation on this to the Council.

    1. realchangz

      Identifying the cost of migrating to a more timely, transparent, accurate accounting – one that facilitates actionable decision-making – should of course be a key requirement of any recommendation.

      That said, the tendency of past commissions and councils to get lost in analysis paralysis is legion.

      When we consider that our present “accounting system” has allowed us to wander $40-60MM down the road in “deferred roadway maintenance” set asides – who cares if the estimates for new software/conversion is off by a couple of million dollars. We need and deserve an accounting program AND ACCOUNTING REPORTING system that does more than balance the pennies. We need a system that shows in bright red letters when a program is going sideways – from the outset, rather than five to ten years down the line.

      Of course, all of that’s not going to happen simply because of a new accounting program, but it could happen as the result of a new ACCOUNTING SYSTEM.

      Hopefully, then, as you recently pointed out, the City Council would have no choice other than to address the underlying problem on a real-time basis.

    2. jeff

      Hpierce
      Absolutely the cost analysis needs to be done. As mentioned in the article we have formed subcommittees, one of which is specifically tasked with researching new infrastructure and software. We are just getting started and staff has hired a consultant and they are researching the project as well.
      Here is the current process as I understand it.

      The CC approves the budget by the end of June. Staff gets a reprieve from the budgeting process until maybe October and then the entire grueling event starts all over again. So we spend 8 or 9 months with differing numbers of staff working on preparing the budget. Without opening a can of worms regarding compensation, if you include supervisors, managers, department heads as well as finance department staff and the CM it is pretty easy to start to see how we could save hundreds of thousands of dollars a year in streamlining this process.

      Next extract the Big water projects for now out of our current budget and we still have over $60 million plus in services/project expenditures outside the General fund plus another $41 million in General fund expenditures. So if we can just increase productivity by 1% by implementing a new system we could save $1 million per year as well.

      In a past life I spent a fair amount of time in system integration from both the proposing/selling side as well as the real work of implementing new infrastructure and integrated solutions. They can be expensive, hard to implement and one does not have to look far to find failed projects. That said, if I were in charge I would initiate a complete evaluation of our current business model. Build the traditional “as is” model followed by the “to be” model developed with staff and management. And finally, build the underlying relational data model, buy the off the shelf software we can and write the remaining user interfaces where necessary. Easy? No. Doable? Yes.
      So for now I believe the system would pay for itself in 12 to 18 months. However, we will continue our research and report our findings to CC, staff and to the public through our F&B C meetings.
      Jeff

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