Obstacles to Results-Based Management, the Erosion of Analytic Capability, and the Hazards of Municipal-Guaranteed Debt
Plus: Life in the 'burbs, and more management news
Are you aware of significant opposition to the use of results-based performance information? If so, what are the sources of that opposition or skepticism? Can you describe the reason or reasons for that opposition? These are probably the easiest of the four questions we've asked on behalf of GovPerformance, in order to get a better understanding of the role of performance measures in budgeting, policymaking, management and so on. It's probably the easiest of the four, and we look forward to hearing from B&G readers with comments.
The steady erosion of analytic capacity has been a matter of concern for some time. We've fretted about this both in the B&G Report and in our Smart Management column in Governing. The countervailing argument has been that governments are better off putting money into direct services than into auditors, accountants, analysts and the like.
But here's a little news from Broward County, Fla., that supports our concerns. According to the South Florida Sun-Sentinel, the number of employees in the county's accounting division dropped from 60 in 2008 to 38 this year. Result: Checks were paid with no documentation, reports the county's independent auditor. Want more? "As the number of employees in the county's finance and administrative services department dropped over the past few years, the number of shortcuts rose."
Apparently, when the county auditor became aware of the depth and cost of the problem, he didn't even wait to finish the audit itself before informing county officials.
With credit still tight for water and sewer utilities, solar power systems, mixed-use redevelopment projects and others, one solution is to convince a municipality to guarantee the debt. In these cases, generally, the borrower's debt can be issued with the higher rating of the guaranteeing municipality.
But Moody's Investor Services recently issued a report that warns about the hazards of such guarantees. The report focuses on New Jersey, where these kinds of guarantees have become increasingly common. "In our view, nonpayment of guaranteed bonds is equivalent to a default on a municipality's own general obligation bonds," said the report's author, Moody's AVP-Analyst Josellyn Yousef. "In some cases, a guarantee on debt of an encumbered enterprise has precipitated material credit deterioration that led to rating downgrades of the municipalities acting as guarantors."
"You've got to somehow make a suburban dweller realize that the quality of life in the suburbs is directly related to the intensity of the core of the city." —Oklahoma City Mayor Mick Cornett
If we were writing a book on government management, we'd devote a whole chapter to the importance of considering operating costs, including maintenance, when cities or states invest in any kind of new infrastructure.
Consider Fresno, Calif., which has just gotten some $5.7 million in grants for city parks. As things stand, according to The Fresno Bee, money for park maintenance has already been "slashed," leaving much of the labor to volunteers.
Fortunately, city leaders are aware of the problem and have deferred building parks until they know there's enough cash available to keep them in good shape. One effort: "Convince nearby property owners to tax themselves, then persuade companies and philanthropists to supplement with donations." This may or may not work. But kudos to Fresno leaders for asking the right questions. Too many other places build parks first and only then start wondering how to keep the grass cut.
Here's a factoid for leaders of states, counties and cities who need to make the case that the backlog of local infrastructure investment in the United States has reached an alarming point: According to the Federal Highway Administration, the average U.S. bridge was built to last 50 years and is already 42 years old.
With all the attention being paid to pensions, it's easy to ignore the somewhat smaller — but still significant — chunks of money that states have effectively borrowed from the future. Consider unemployment insurance trust funds. According to the Urban Institute, "as of April 17, 2012, 30 state programs have outstanding Treasury loans [for unemployment insurance] totaling $41.5 billion with an additional $5.0 billion owed in the private securities market. Seven state programs owe more than $2.0 billion, led by California with a debt of $10.8 billion. Even if the recovery continues at a strong pace for the next five years, many of our biggest states will likely owe substantial amounts past 2015. A recession later in this decade would only add to state trust fund indebtedness."
We're not entirely sure that many citizens really want to understand the budget for their city or state, particularly when they have the option of just complaining about it. That said, we were personally excited to see New York's Citizen Budget Commission's effort to greatly add to the transparency of the budgets for both New York City and New York State. Take a look at the CBC Budget Calculator, which lets you "compare figures from past years, spot trends and relationships, and help us keep a close eye on New York's finances."
Procurement certainly isn't the sexiest governmental function. But it is an area in which cities and states have the opportunity to save large sums of money without sacrificing quality. Sabrina Stover, the chief executive officer of BidSync, a firm that helps government agencies work better with suppliers of goods and services, shared a few tips with us:
- Agencies should get online. "Get an electronic procurement system," Stover says. "Not only will it streamline your process, but it will also create transparency for you. Someone who has never done business with the government before (may join in the bidding) and help provide more competitive pricing."
- When you're online, consider reverse auctions, "which allow vendors to come in and say, 'I can give you that for twenty.' And the next one says, 'I can do it for 18.' The reverse auction ends at a certain date in time." Then, assuming they meet quality standards, whoever comes in with the lowest bid, wins.
- "We also encourage them to get a full end-to-end procurement system. It helps them to manage their spending; to know when they're going over budget; to see when they're doing maverick spending that's not within a contract."