Revenue Rank: 10
Form of Government: Mayor-Council
Mayor: Willie W. Herenton (took office 1992)
City Council: 13 members, elected by district
FINANCIAL MANAGEMENT: B
At heart, financial management in Memphis is a conservative, rational affair. The retirement system is amply funded. Investment policies and controls are thorough and sensible. There is a long history of good financial reporting: Memphis has won the GFOA Certificate of Achievement for 22 consecutive years.
But expenditures have been growing faster than revenues for the past several years, and Memphis has gradually been eating into its reserves. In 1998, the city spent about 3 percent more than it took in, partly to pay for substantial police overtime. Financial managers say they’re not concerned, and that the imbalance can be rectified either through a property tax increase or, if the council rejects that notion, by cutting expenses. So far, the city’s leaders have been hesitant to try for the tax increase.
Memphis has employed the consulting firm of Deloitte & Touche to develop a long-term revenue and expenditure projection process. “It will help us allocate our resources and determine at what point we need to take a look at what the gaps are in revenue projections,” says Mark Brown, the deputy finance director.
HUMAN RESOURCES: D
Managing personnel in Memphis is a little like trying to swim against the current in the Mississippi River. Temporary employees are overused, work force planning is weak, hiring takes too long, managerial training needs improvement, and labor relations are marred by impasse-resolution procedures that require the city council to step in when negotiations fail.
The job-classification system hasn’t been updated in 15 years. This means that unless exceptions are made — which is often the case — hiring is done based on what a job required in 1985, rather than what it requires today. “We can’t live with it,” says Westelle Flores, the city’s human resources director. “It is archaic.”
Decentralization has made the whole situation worse. Discipline and grievance procedures can vary from one agency to another.
Memphis does deserve credit for revamping its performance appraisal system — a major effort that involved employee surveys, benchmarking on other cities and the use of employee task forces that cut across jurisdictional lines.
INFORMATION TECHNOLOGY: C
A year or two from now, information technology in Memphis will look dramatically different from the way it looks today. The mayor has decided to outsource the entire IT effort, including its management. The prime objectives are cost savings and access to a larger pool of properly trained information specialists.
For now, though, IT here is no prize-winner. Creative ideas are tried, but more often than not, they are impeded by bureaucratic constraints. For example, training is available for employees in the use of technology, at a reasonable $50 a day per student, but many of the individual departments have refused to spend any money on it. The purchase of new equipment can be hampered by a purchasing department that sometimes ignores the special needs of IT procurements. Agencies have been told to release information about their activities to the municipal Web site, but the response has been poor, and only minimal information is available online.
One strong point: In 1993, Memphis developed a citywide strategic plan that included replacement of an old mainframe computer with a fully integrated client/server financial management system that included some human resource applications. One result was that the city was ready for Y2K long before many others.
CAPITAL MANAGEMENT: B
The capital planning process here is thorough. A five-year capital improvement plan is submitted by the mayor and reviewed by the council and its Capital Improvements Budget Committee. Each city division is responsible for development of its own capital plan that meets the overall priorities.
Public opinion is incorporated into the plan through an annual telephone survey of residents, and citizens have helped in creating plans for specific assets, such as the master plan for parks. City leaders acknowledge that more public input into the process would be helpful.
Although capital improvement funds are used for repaving streets in Memphis, maintenance funds are at the mercy of the annual operating budget. As a result, one manager says, “we have never pursued the cost which we believe to be necessary.”
MANAGING FOR RESULTS: B-
Performance measurement and strategic planning have not traditionally been an important part of Memphis government. In the past two years, with the participation of Deloitte & Touche and the University of Memphis, a strategic and results-oriented management plan for the city has finally been drawn up. It is designed to serve as a combined financial and strategic plan stretching out five years. But the plan is still in draft form.
The budget contains formal objectives, but most of them relate to outputs rather than outcomes. In a number of instances where objectives are outcome-oriented, the measures to monitor them still haven’t been developed. And there is no public presentation revealing whether actual results come up to targets.
Memphis is starting a quarterly performance-review process, however, in which targets and actuals will be compared internally. The first submission was for the first quarter of the 2000 fiscal year. The administration plans to share this data with the council during budget preparation for 2001. “Before we started disseminating it, we wanted to track a couple of quarters of information,” says Roland McElrath, the finance director.
AVERAGE GRADE: C+
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