Local Government Dollars and Sense: 225 Financial Tips for Guarding the Public Checkbook

Abstract: Every locally elected official, candidate, and concerned taxpayer should read this insightful commentary on how to provide fiscal oversight, hold non-elected staff accountable, and avoid a variety of pitfalls. Includes numerous case studies.

Keywords: book review, politics, economics, local government, fiscal policy, oversight, due diligence, taxes, finances, city council, mayor, county supervisor, school board, accountability, bonds, services.

CONTENTS

Chapter 1: Stop Campaigning and Begin Governing

• Don't be Hamstrung by Unrealistic or Uninformed Election Promises
• Keep on Top of Your Promises
• Brace Yourself for Information Overload
• Switch to Your Governing Mode
• Obtain Key Documents
• Build a Positive Relationship with Staff
• Lay the Groundwork for Your Proposals
• Don't be Afraid to Ask Questions
• Don't be Reluctant to Say "I Don't Know"
• Get on a Budget or Finance Committee
• Protect Your Meeting Time Like the Last Potato Chip
• Don't Rely on Osmosis to Learn About Public Finances
• Get Used to the Sunshine
• You Must be Accessible to the Public
• Establish a Continuous Self-Education Program

Chapter 2: Know Your Financial Oversight Responsibilities

• You Must Exercise Oversight
• Maintain Your Independence
• Public Finances Need Not be Boring
• Avoid Micro-Management as an On-going Practice
• Avoid Complacency Management
• Elected Official Oversight Means Holding Administrators Accountable
• Don't Accept Unrefined Data
• Exercise Your Financial Oversight Responsibilities
• Make the Mission Statement Your Own
• Develop the Governing Body's Goals
• If You Don't Set Your Agency's Goals, Staff Will
• Agree Upon the Level of Detail in Goals
• Update and Prioritize Your Goals
• Develop Financial Policies
• Review Your Agency's Financial Policies
• Oversight Means Evaluating Programs Beforehand
• Insist Upon Performance Evaluation Criteria for New Proposals
• Make Sure of the Follow-Up
• Hold Goal Setting Retreats
• Set Retreat Ground Rules
• Follow-up After Retreats

Chapter 3: How to Lessen Budget Anxiety

• Budgets are More than Control Documents
• Budgets are Plans of Action
• Budgets Need not be Complex
• Budgeting is Irrational
• Budgeting is also Rational
• You Have Little Control Over the Total Expenditure Program
• Determine What Type of Budget Your Agency Uses
• Don't Ignore the Capital Budget
• Focus on Significant Budget Issues
• Expect the Budget Message to Clarify the Big Picture
• Public Accounting is Different from Commercial Accounting
• Examine the Beginning and Ending Balances Table for the General Fund
• Find the Personnel-Related Statements
• Suggested Budget Questions
• Ask Hard Questions Before Approving a New Program
• Avoid Trivial Pursuit
• Hold Separate Hearings for Major Public Proposals
• Make Sure the Budget is Made Available to the Public
• Recognize the Limitations of the CPI

Chapter 4: Disastrous Fiscal Practices

• Know the Chief Administrator's Financial Skill Level
• Don't Let Program Success Blind You
• Fiscal Crises do not Develop Overnight
• Be Aware of the Financial Crisis Warning Signs
• Management Response to Warning Signs is Critical
• Debt Insurance is a Poor Bail-Out Method
• Look for Breakdowns in Management
• Avoid Financial Gimmickry and Cut Your Losses
• You've Got to Rein in the "Pleasers"
• Beware of Fiscal "Ambulance Chasers"
• You Cannot Borrow Your Way Out of a Fiscal Crisis
• Avoid Bankruptcy Filings

Chapter 5: When You Must Cut

• Identify the Inhibitors to Solving the Problem
• Determine why Cutbacks are Really Necessary
• Examine Revenue Estimates
• Rightsizing is Not Downsizing
• Develop a Cut Back Philosophy
• Identify Your Core Services
• Priority Rankings Require a Mature Approach
• Examine Management and Administration Costs
• Examine the Levels of Management
• Make Sure Cutback Strategies are Affordable
• Don't Cut Revenue Producing Programs
• Avoid the Other Common Cutback Mistakes
• Hang Tough on Budget Freezes
• Determine Who is Lobbying You and Why
• Create an Incentive for Departments to Cut Budgets
• Small Cuts are Important
• Establish Specific Parameters for Blue Ribbon Committees

Chapter 6: Sins, Omissions, and Poor Judgment

• Don't Let Squeaky Wheels Reset Your Priorities
• Don't Fight Citizen Requests for Information on Services
• Government Cannot Always Operate Like a Business
• Don't Flaunt Court Orders
• Avoid That Little Retirement Bump for Good Ol' Sam
• Get a Fiscal Impact Assessment for Benefit Packages
• Don't Let Vacation Liability Accumulate
• Check Overtime Usage
• Monitor Use of Agency Vehicles
• Oversee Off-Duty Use of Public Vehicles
• Monitor Credit Card Usage
• Don't Use Public Resources for Campaign Purposes
• Don't Frolic and Fraternize with Consultants
• Soliciting for Charity can also Present Conflicts
• Separate Contributions from Decisions
• Don't Use the Register of Warrants for Political Games
• Don't Get too Close to Employees
• Monitor Litigation Costs
• Assume That There Will be Leaks

Chapter 7: Where is the Money Hidden?

• Why Money is Hidden in the Budget
• Budget Padding is a Common Hiding Technique
• Budget Padding can be Minimized
• "Giveaways" in the Budget are Common
• Even Governing Bodies Resort to Hiding
• Don't Expect Hidden Money to be a Panacea
• Unmonitored Slush Funds Grow in the Dark
• Don't Plead Inability to Pay with Unions
• Unions are Adept at Finding Hidden Money
• How to Look for Hidden Money
• Examine General Fund Revenue
• Examine General Fund Expenditures
• Check Fund Balances First
• Favorite Resting Places for Surplus Monies
• Check for Increases in Expenditures

Chapter 8: What is an Adequate Fund Balance?

• Understand Fund Balance Definitions
• Find the Primary Fund Balance
• Find General Fund Reserve Policies
• Obtain a Historical Trend of Your Agency's Fund Balance
• Get the Entire Picture
• Things to Consider When Establishing the Reserve Level
• Check Reserve Policies of Other Funds
• Setting the Fund Balance Level

Chapter 9: Treasure Your Treasurer

• Treasury Oversight Deserves More Attention Today
• Assess Your Treasurer's Current Competence
• Train and Compensate Your Treasurer Adequately
• Elected Versus Appointed Treasurers
• Develop a Line of Succession
• Don't Press too Hard for Yield
• Be Cautious but Demand Performance
• Insist Upon an Adequate Cash Management Program
• Make Sure Safety is the Top Priority
• Let Independent Third Party Custodians Hold Your Securities
• Have an Independent Auditor Evaluate Internal Controls
• Follow-Up on Requested Evaluation Reports
• Make Sure Your Treasurer is not Enamored by Brokers
• Appreciate the Risk Involved in Leveraging
• Make Sure Your Investment Policy is Followed
• Require Market Value Reporting for all Securities
• Nurture an Effective Investment Committee
• Make Sure Investment Reports are Timely and Adequate
• Monitor the Yield on Investments
• Make Sure the Portfolio is Diversified
• Know Your Investment Pool's Policies
• Thoroughly Examine an Investment Pool Before Joining
• Don't Let the Treasurer Buy if it Can;t be Explained to You

Chapter 10: Performance Measurement: What's the Fear?

• Performance Measurement is not New
• Don't Settle for the Numbers Game
• Have Staff Develop Outcome-Oriented Objectives
• Be Ready to Focus on Results
• Performance Measurement Works with Contract Services
• Performance Measurement Will Improve
• Make Sure Your System is Working
• Use Objectives to Evaluate and Manage, not Punish
• Don't Settle for Vague Measures
• Reinforce Well-Stated Objectives
• Bring the Public Along
• You Must Review Performance Results
• Look for Unintended Consequences
• Limit the Number of Objectives
• Modify Objectives When the Situation Changes
• Use Customer Surveys
• Encourage the Use of Benchmarking
• Insist Upon Periodic Audits of Performance Measures

Chapter 11: Where Do We Get the Money?

• Grants can Undermine Fiscal Discipline
• Don't Blame the Feds
• Avoid the Grant Pitfalls
• When to Apply for a Grant
• When Refusing a Grant, Tell Them Why
• The Property Tax is Still the Most Despised Tax
• Determine the Full Cost of a New or Increased Tax
• Avoid the Static Analysis Pitfall
• Don't Bank on "Sin" Taxes
• Don't Promise Tax Cuts Unless You Are Committed
• Don't Overreact to Tax Limitation Measures
• Examine Self-Sufficiency Claims
• Make Departments Responsible for Revenues
• Watch the Growth in Public Debt
• Don't Raid Enterprise Funds Without Documentation
• As a Rule Staff Will Underestimate Revenues
• Don't be Pack Rats -- Dump Excess Property

Chapter 12: Sewers and Classrooms Don't Vote ... Right Away

• Devote Money to Repair and Maintenance
• Be Aware of Deferred Maintenance Decisions
• Deferred Maintenance Costs More
• Budget Operating Expenses for Capital Projects
• Question Before You Cut Capital Expenditures
• Make Sure Proper Security Measures are Implemented
• Make Sure Bond Promises are Kept
• You Must Level with the Public
• Line-up Support for Capital Improvement Programs
• Be Especially Cautious Before and After a Bond Issue Election
• Consider Using an Oversight Panel for Capital Projects

Chapter 13: Support Your Local Auditor

• Be Aware of the Different Types of Audits
• There are External and Internal Auditors
• Auditors Must be Independent
• Clarify the Role of the Auditor
• What Makes a Good Auditor?
• Auditor Red Flags
• The Four Types of Auditor Opinions
• An Unqualified Opinion Does not Mean Everything is in Order
• The Audit Report is not the Same Thing as the CAFR
• Your Agency may not Prepare a CAFR
• The Budget Does not tie into the CAFR
• Obtain Copies of Management Letters
• Use a Competitive Process to Obtain an Independent Auditor
• Make Sure Audit Firms are Technically Qualified to Perform Public Agency Audits
• Be Sure to Enter into a Written Agreement
• Auditors Should use Performance Measurement
• Consider Using an Audit Committee

Chapter 14: Public-Private Ventures are not for the Timid

• Keep the Electorate Informed
• Negotiate Hard and Don't Leave Anything on the Table
• Conduct a Detailed Risk Analysis for all Entrepreneurial Projects
• Question Projected Benefits and Costs for Entrepreneurial Ventures
• Obtain Unbiased, Independent Studies
• Add up all the Incentives
• Know When to Pull the Plug on Entrepreneurial Ventures
• Get Ready for a Gutter Fight if You Steal an Enterprise
• Don't Let Time Pressures Void Your Good Judgment
• Be Ready to Take Over an Enterprise if it Defaults on a Loan
• Don't Let the "Entrepreneurial Bug" Derail the Primary Mission
• Know the Market
• Start Asking the Important Questions Early

This book is on my shelf awaiting further review.

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Copyright © 1998     Orville R. Weyrich, Jr.     Last updated: February 13, 2000; Version: 1.3