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Monthly Archives: September 2010
The scandal involving the “Bell 8” over their excessive pay and benefits took a serious turn last week when they were arrested on dozens of charges stemming from actions that included excessive salaries for paid staff, stipends for City Council members to serve on boards and commissions that barely met, and inappropriate loans of City funds to individuals and civic groups. Their former City Manager alone faces 53 counts involving the misappropriation of more than $5 million of taxpayer funds.
The lasting impact for Bell, a working class city with one of the highest tax rates in California and a significant debt burden, could be far worse. Audits have uncovered millions in illegal tax collections that will have to be repaid. Far more difficult for the City and its remaining leadership will be restoring any semblance of trust or respect with their citizens.
Beyond Bell and Los Angeles County, the scandal served as another reminder of the significant disconnect in communication between local governments and the citizens they are supposed to serve. As I mentioned last week, the growing gap in compensation between government and private sector employees is very significant, and it has been growing in the same direction for about forty years. Government data basically shows that, as a whole, the conventional wisdom that government employees did not earn as much as their private counterparts on the basis of salary is no longer accurate, and has not been for decades.
Naturally, citizens are responding by demanding more information on the compensation provided employees hired by their governments. I have heard several counterparts discuss requests made to them by individuals wanting specific information on employee salary and benefit amounts. This follows a trend that has been in place for a little while, as evidenced by the decision last summer by the Nashville Tennessean to post actual salaries for all State of Tennessee employees.
Government employee salary and benefit information is a matter of public record, and when requests are made, local jurisdictions have a moral and ethical obligation to provide honest information to inquiring citizens. As a means of maintaining public trusts by promoting institutional accountability, jurisdictions are and may continue to adopt new practices where employee salary information is made on websites and other sources.
Proactive delivery of this information to a desiring public (i.e., pushing rather than pulling, for those of you in public relations) does provide local governments the opportunity to tailor the message to provide convey the truth with an honest perspective. In North Carolina, jurisdictions can take advantage of the requirements set forth in the NC Transparency Project, an initiative of the right-leaning John Locke Foundation.
The NC Transparency expectation in this area for local governments to provide general employee salary information by job code (or title), as well as for specific employees making $50,000 or more per year. Several jurisdictions, like the City of Concord, achieved compliance with the first part by including pay plan documents that show the pay scales each of their position titles are aligned with. For positions held by multiple employees, a solution such as this makes the most sense.
Identifying those employees with higher salaries ($50,000 or more) has not been met with the same level of adoption. However, this concept is an appropriate middle ground in order to give citizens the information they are most concerned about (salaries of management and senior positions). In order to apply the proper context, jurisdictions may consider showing comparisons for these positions with state or survey group averages.
Another option of communicating government employee compensation that jurisdictions may want to consider is to examine the distribution of total contribution across job titles, departments, or pay grades. Generally speaking, citizens understand that government employees in high-demand roles (police, fire, public works, and other critical services) need to be paid sufficiently in recognition of their service and in order to avoid losing them to other potential employers. Their concerns, more often than not, are about the compensation levels of management, especially the impact of their higher salaries as it relates to those of direct service providers.
Preparing a graph or other visual aide that shows how total compensation is split across each department, job title, or pay grade should give citizens a better understanding of how their taxes, fees, and other revenue commitments are distributed to achieve and maintain quality services. If citizens see that the lion’s share of jurisdiction salary money is going to police officers, firefighters, and other service positions, rather than administrators, they are likely to be less critical of individual salaries, so long as they are not at unethical levels.
Government has a moral obligation to stand accountable and open with respect to the compensation of its employees. Public inquiry, along with rigorous review by elected officials, provides the best possible defense against unscrupulous behavior that leads to scandal and crises of trust.
ASPA Member Kenneth Hunter is an MPA Graduate of The University of Georgia with more than a decade of experience in local government finance. Kenneth is the Budget & Evaluation Manager for the City of Rocky Mount, North Carolina, and serves on the Executive Committee of theAssociation for Budgeting & Financial Management and is a Board Member and Webmaster for the North Carolina Local Government Budget Association.
By Kenneth Hunter, Guest Blogger
By Rajesh Kumar Shakya, Ph.D. Student (DPA)
Poverty in numerous communities is significantly related to a lack of education, information, knowledge as well as of good governance. Information and Communication Technologies (ICTs) is a powerful tool to address these root issues. Economic impoverishment is often related to market inefficiencies associated with poor market information, while poor governance is often related to low levels of community awareness of government activities – all these are information related, as are the skills to act on information itself. The focus on the ICTs partly represents recognition that these demands on today’s public sectors cannot realistically be resolved by traditional service delivery mechanisms of developing countries.
It seems that the ICTs, within the context of developing countries, are not just another economic infrastructure. The role of ICTs in development and especially in poor rural and regional areas has been accepted by the governments around the world as being particularly significant. Indeed these technologies possibly represent the only realistic option for delivering meaningful outcomes to much of the population within a foreseeable timeframe.
National and local governments around the world are embracing e-government – are putting services and information online, automating inefficient processes and interacting electronically with their citizens. The ICTs are able to inexpensively bring services to communities that currently have inadequate services or none at all. The option is often therefore, not between a human face and a computer; it is more likely between a computer and little or nothing at all.
This understanding forms the foundation for the vision of e-government. However, visioning in this area has become extensive and has far outreached implementation.
One of the principal lessons of e-government implementation worldwide is that the implementation roadmap for e-government must, on the one hand learn from international experience but must also be a home grown product. Thus any country implementing e-government can learn from the experiences of Singapore, Malaysia, Korea, Australia, India and others as well as the less successful strategies, but must also contextualize a strategy for specific to their countries. A strategy that is simply imported from another jurisdiction represents the ‘black box’ approach and is almost guaranteed to lead to a loss of understanding, ownership and probably commitment, as well as engendering a culture of dependency.
Issues and Challenges
E-government is not a pre-packaged solution for participation and good governance, efficiency or clean government. Instead e-government entails deep public sector reform that must be evolutionary. E-government is about transformation where technology is a catalyst and a tool. Yet, if e-government is an isolated process and not part of a larger program for improvement then it is unlikely to deliver its potential or expected benefits. Success in e-government ultimately requires changes in how government manages information, and how civil servants undertake their jobs and interact with the community. E-government transformation like any major public sector reform also presents costs and risks, both financial and political.
These risks are usually significant. There are already several examples of failures in different countries because of insufficient understanding, loose ownership and uncoordinated implementation approach. Such failures not only waste opportunities and resources, but also challenge the public trust on e-government, and innovative programs initiated by the governments. Particularly the governments in developing world need to start with such dimensions of e-government, where chances of success is high, citizen support and participation is more likely, and also value-for-money is clearly visible and value-for-service can be appreciated. The first success may then bring the snow-ball effect on the implementation of other areas of e-government. Early failure may hold back the reform process and correcting the mistakes politically and financially may cost a lot. Simply using computer hardware and software, and automating the same old red tapes are not e-government. Public agencies need to identify the objectives for reform and then consider how technology can assist. Properly applied technology is a tool to enable and facilitate government reform, improperly applied technology is a waste of money. Moreover, e-government in the developing world mostly hindered by different socio-political, and need based challenges like volatile government leadership, lack of resource commitment, lack of access to technology, inadequate physical, legal and other supporting infrastructure, corruption, and many other cultural factors.
E-government cannot be implemented simply by issuing an order from political leaders or a central authority – this would be a futile expectation. E-government requires that officials change the perceptions and actions, and the way they exchange information between government departments (G2G), with the community/Citizens (G2C), and with business (G2B).
[Rajesh Kumar Shakya is the practitioner e-Government and e-Government Procurement Consultant for different governments in Asia, Europe, and Africa. More issues, aspects, and practices in e-government around the world will be discussed in his future posts.]
Lawyers have a saying: “hard cases make bad law.” That is equally the case when hard-pressed city administrations look for ways to generate revenue. There is an excellent example in Indianapolis, where the Mayor has recently proposed to privatize the city’s parking infrastructure by entering into a fifty-year lease with a private company.
The proposal raises a number of issues particularly pertinent to those of us who teach local government policy.
1) Why would any city turn over an important part of its infrastructure to any private company for fifty years? Even if the deal were less one-sided fiscally than this one appears to be, decisions about where to place meters, how to price them, optimum lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. They are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.
2) Why would a city enter into a contract that will add significantly to the costs of downtown development? Indianapolis, like many cities, has worked hard to encourage construction of hotels, retail establishments and residential units in our urban core. Often, that construction has interrupted adjacent parking. When the city manages its own parking, it can choose to ignore that loss of parking revenue, or to charge the developer, based upon the city’s best interests. Privatization will require payments to the contractor whenever such interruptions occur, adding significantly to the costs of development in the urban core.
3) Will the proposed contract provide incentives for mischief? Much has been written about the problems with Chicago’s parking privatization, but far less about problems in places like Washington, D.C., where an audit documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets—the latter because the agreement provided that the contractor got all of the revenue for tickets.
Why would a city choose to enter into a contract having the potential to create so many problems down the road? In Indiana—and probably elsewhere—the answer is obvious: we are starving local governments. Mayors do not have the resources needed to provide even essential services. As the urban blogger Aaron Renn (the Urbanophile) has noted, they are vulnerable to seduction by the municipal equivalent of payday loans.
The art and science of strategic planning has come a long way. In the early days of my career in management, a strategic plan was something the boss created. If you were lucky, he shared it with you. If you were luckier, he pointed out how the plan took you and your work into consideration. Moreover, the organization was fortunate if either of you remembered it a year or two down the line.
Today’s strategic planning process looks much different. Or at least it should. Organizational leadership today recognizes that stakeholders throughout the hierarchy have insights and information essential to the success of the business and finds ways to elicit input from every person. While this is not always easy to do, it results in a rich and effective planning process. In addition, leaders and managers who want the strategic plan to comprise the fabric of the organization make sure that progress towards goals is routinely communicated to all stakeholders.
Which brings me to my final, crucial point: Although strategic plans cover a long-term vision for the firm, a strong and relevant strategic plan is a working plan, not a document to be developed and archived for 3-5 years. It should be reviewed and evaluated at least annually. Progress towards goals should be assessed frequently and routinely, and the objectives and strategies amended if goals are not being achieved. The strategic planning process is never completed. It navigates and documents and organization’s journey. It is both the map towards the organization’s future and the guiding beacon that leads the way.
NOTE: The following represents the analysis-based opinion of the author and do not reflect those of his employer or any other affiliations.
By Kenneth Hunter, Guest Blogger
Reports on the growing gap in compensation between government employees and their private sector counterparts, specifically focusing on the higher salary and benefit levels enjoyed by government workers, is not surprising. The present economic climate, along with the increased prominence of government involvement in life and society engineered by the Obama administration since it took office last January, easily facilitate the opportunity for the media and pundits to make quick note and judgement of a situation that, from an economic standpoint, does not bode well for the general public and their desire for economic growth.
Of course, the media and political focus is on the basic and the present. By now, we have all heard that total (salaries and benefits) Federal employee compensation was approximately $117,780 in 2009 (according to the Bureau of Economic Analysis). This is 93% greater than the comparable average (per FTE) in the private sector ($61,051). Respectively, state and local government employees’ average compensation is only 14.5% greater than the private sector.
For most of the public, recent media reports are the first time they have ever seen evidence that government employees, on average, earn more in benefits and salary than private sector employees. Many have been long aware of the gap government employees enjoy with respect to the value of their benefits, but the fact that Federal workers now possess significant advantage in direct earning potential is a discovery that shocks, and angers, most people who learn of it.
The reality, however, is that this compensation gap has existed for a while. Looking at the BEA’s sector compensation data for the past 80 years, we see that average compensation levels between the three employment groups remained close until 1970.
Between the end of the second world war and the end of the 1960’s, government employees lagged behind private sector employees in salary and acrruals (i.e., vacation, sick time, etc.), but saw greater value associated with their benefits. With the arrival of significant inflation in the late-60’s (precipitated, in large part, to increased Federal spending and monetization), indexed government salaries kept up with the cost of living, while private wages did not. Between 1968 and 1973, Federal employee wages (which started out this period close to private sector and state/local government) rose 10.5% per year, while private wages grew only 6.3% annually (growth for state and local was 7.1%/year).
In 1970, average Federal wages climbed ahead of the private sector, and they have remained there since. State and local wages continued to remain relatively close to the private sector until 1983 (once again influenced by inflationary indexing).
There are other factors, of course, that contribute to these disparities. Federal civil service reform in the 1970’s, especially the establishment of the Senior Executive Service, providing not only higher base salaries for thousands of select positions, but also the opportunity for annual performance awards and greater annual increases. According to Office of Personnel Management reports for FY 2009, more than 6,200 SES employees earn base salaries averaging more than $160,000, with performance bonuses averaging more than $15,000 (see http://www.opm.gov/ses/facts_and_figures/data_trends09.asp for more information).
Another factor, not discussed much, is the impact of salary “accruals”, including sick and vacation time. Workforces across the board are aging, but Federal workforces are in good position with respect to longevity-based allowances for vacation and sick time. Given that these accrued compensation days (along with the potential for comp time for certain salaried positions) is valued at ever-growing levels of pay, the impact to overall compensation (and its potential impact on short-term liabilities the government incurs on behalf of its workers) is magnified.
Benefit disparity requires much less an explanation. The same economic pressures that forced the private sector to limit growth in employee wages also contributed to the implementation of additional efficiencies to constrain growth in benefit costs. While private workers labored through reductions in health insurance coverage and the transition from defined-benefit pensions to defined-contribution retirement programs, government employees across the board relished in more generous provisions, mostly inherited from the pre-1969 era. Naturally, the cost of these benefits skyrocketed, especially on the Federal employee level. More than likely, without significant reduction measures, the value of these benefits will continue to grow, only increasing the compensation gap with private industry, even if salary growth is curtailed out of economic, fiscal and political necessity.
From a political perspective, the compensation gap serves to increase the level of anger and dissatisfaction citizens have with the government that, in our country at least, is supposed to reside in the position of humble, respectful servant. While we can get into a litany of discussion about the roles and responsibilities that government employees play in our modern society and economy (to the detriment and benefit of individual liberty and free market opportunity), this ignores a more salient reality. If government workers are compensated better than those in the private sector, is the condition desirable, or even viable?
Prior to end of the 1960’s, relative balance existed between private sector and government employee compensation. The growing disparities with these sectors, especially with respect to the significantly higher values for Federal employees, reflect a trend that needs to reverse course as quickly as possible. We cannot ignore the need to compensate government employees for the services they provide of value to the citizenry, and political shorthand goals of paying government employees the private sector “average” may not necessarily work. The reality, nevertheless, is that respective balance between sectors in compensation must be restored.
State and local governments have some work to do, mostly with respect to benefits. For the most part, if history holds true, their close proximity to the citizenry and its will should enable necessary adjustments. There is also the fiscal reality that smaller governments face, unable to buy their way out of a crisis through borrowing and printing money.
On the Federal level, bringing back balance will require significant civil service reforms, especially with respect to reducing the scope of government employee benefits. Unions and public employment advocates will fight tooth-and-nail to stop the efforts, regardless of and in deference to the financial ruin we face if nothing is done. However, if we remember that government in America exists at the bequest of its citizens, that they are the natural inheritors of power through their God-given rights, we are morally obligated to prove ourselves as the humble servants we are supposed to be.
ASPA Member Kenneth Hunter is an MPA Graduate of The University of Georgia with more than a decade of experience in local government finance. Kenneth is the Budget & Evaluation Manager for the City of Rocky Mount, North Carolina, and serves on the Executive Committee of the Association for Budgeting & Financial Management and is a Board Member and Webmaster for the North Carolina Local Government Budget Association.
You know the time will come when you will advance to a new level in your career. Whether it is a change in accountability, authority, job perspective or management, you want to be ready to make a smooth transition. Join your colleagues on Wednesday, October 6 in Washington DC for a highly-interactive workshop “Preparing Yourself for the Next Level of Your Career.” Michael Card has put together a great program. Those of you who have attended his workshops at recent ASPA conferences already know what I’m talking about. It’s a full day program for $99. We’ll also feed you lunch.
This program is in less than three weeks and seating is limited to ninety participants. Please reserve your spot today to ensure the best rate possible.
The Slippery Slope of Discretion
As a theoretical public administrator, one of the values that I hold dear is that day to day operations of a municipality should be politics-free. As a practicing public administrator, I know that is almost impossible. But one thing that helps is a municipal code that is so clear that there’s no room for political influence.
If the code says “All updates to titles 14 through 19 go before the Planning Commission” then all updates to title 14 through 19 should go before the Planning Commission. A City Council member, Mayor or City Manager who tell staff to bypass the Planning Commission while this code is in place are in danger of violating their own code and therefore putting their careers in jeopardy. If anyone notices.
But comes a day when someone in the above group decides that it’s just too cumbersome to send every ordinance to the Planning Commission for a recommendation and they decide to go through the legally established process of changing the part of the code that says “All updates to titles 14 through 19 shall…” They decide they want to change it to “The Director has the discretion as to which updates go to the Planning Commission.”
While this kind of language could be seen as giving the Director “flexibility,” more often than not what it actually does is make the Director more susceptible to the political influence of people that sign her paycheck. Which is why any city attorney worth their salt would discourage it; too much room for arbitrary and capricious decision making. However, attorneys are just employees too, so after they wisely advise not to give the Director discretion, they draft the ordinance anyway.
I think we can charitably say that the Council isn’t recommending this change because they want the Director to be their political puppet. (They want her to do what they say, but “puppet” is harsh). They just don’t want to have to send every piddly little sign ordinance to the Planning Commission if it means responding more quickly to their constituents. After all, it’s the Little League for crying out loud. They want to be able to put up their signs in the right of way to recruit new members. Juvenile delinquency will go down, test scores will go up, and baseball season starts next week. Why should we make them wait for the month and a half that it will take to get through the Planning Commission and City Council meetings?
Well, maybe we shouldn’t. But then you’ve got to be able to say with a straight face that in using your discretion, you didn’t make the Neo-Nazis wait a month and a half for their requested code update, at least, not just because they’re Neo-Nazi’s. After all, Hitler’s birthday is next week.
Telephones ringing. Printer clacking. Voices murmuring. PDA buzzing. Copy machine pulsating. Online calendar beeping. Traffic throbbing. Sirens wailing. Keyboards clicking. Doors opening. Footsteps rushing. HVAC droning. Pens scratching. File drawer slamming. Elevator whirring. Light fixture humming. Clock ticking.
Within this relentless barrage, analysis is conducted, proposals are made, and decisions are finalized. Often the work is critical, always it is necessary. But how well can we — any of us — effectively manage all that oh-so-vital work without the consideration enabled us by even a single peaceful, uninterrupted moment? Without the opportunity to reflect in stillness, how can we hope to catch the elusive whisper of innovative solutions or noteworthy inquiries?
The great emperor Marcus Aurelius taught an important lesson in his journal, best known now as Meditations: life must be considered from within “a space of quiet” if we have any hope of living it well. Joseph Badaracco explains Aurelius’ philosophy as the belief “that serenity could protect him from the hazard of overimmersion, of losing himself and his bearings in the unending stream of life’s tasks” (Defining Moments, 1997, p.124).
If this long-ago emperor found life hectic, demanding, and full to bursting with demands and concerns and problems needing resolution, how much more so are our lives?
We all instinctively recognize the need for reflection, for consideration, for meditation. Yet we decry that need, insisting we do not have time to devote to such unproductive activities. We’re too busy, too important, too understaffed or overwhelmed or underpaid or inundated to waste our precious minutes in such pursuits. Certainly the concept has merit, but realistically there’s no way we can find the time for such petty endeavors.
And so on we go, bumbling along our daily path, secure in our own self-consequence, certain we’re doing “the best that we can.” Even when we’re not.
So, this is my challenge to each of us today: take three precious minutes to enjoy a space of quiet. Close the door. Step outside. Sit in the car. Dawdle in the restroom. Hide in an unoccupied cubicle. Gift your brain, for a mere 180 seconds, with a space of quiet. You might just find that it saves your soul.
The Reset Movement May Present A New Opportunity to Reintroduce PPBS to States’ Budgetary Processes.
Since the beginning of the current economic downturn, a new reality has settled in. The revenue picture has changed dramatically for almost every jurisdiction. Recognizing that fact, a new movement calling for a fundamental change in the way government works and is funded has emerged: The ‘reset movement’. A movement that gained momentum following a paper last February by John Thomasian of the National Governors Association Center for Best Practices. Some of the recommendations from that paper, no doubt, were adapted by many of the states’ governors as they created their reset commissions, cabinets, or workgroups. Governors, because their state constitutions require them to balance their budgets, have been the leaders of the reset movement, and the media has been paying attention. For example, in its June 27, 2010 editorial, The News Tribune, out of Tacoma, Washington, complemented its governor, Chris Gregoire, for what they termed “talking the talk with state government reset”.
“Determining budget priorities by checking what’s in the wallet puts state spending on a roller coaster. The highs and lows are jarring – but even worse, they fuel the expectation that, even as state spending is plummeting, it soon will be climbing again.
Gregoire is proposing something better, albeit more wrenching: Recognize that state government cannot return to business as usual. Banish the expectation that every time the state gets a new dollar, it goes to replace the dollar lawmakers took to balance the last budget. Don’t just make cuts, make lasting changes in the way state government looks and operates.”
What Gregoire is proposing is not significantly different from what other governors have been saying. For example, Daniels (Indiana) articulated his vision last September in a Wall Street Journal opinion page and Kulongoski (Oregon) proposed his reset initiative in a June speech to the City Club of Portland following recommendation from his reset cabinet.
What these governors are also facing is the reality of traditional budgeting processes that make it difficult to operate rationally. Rational budgetary efforts based on real data generated from actual research generally fail because political coalitions that yield political victories also stay intact during the budgetary process, and subsequent considerations typically assume political characteristics that exhibit themselves when governments start looking at programs in questioning ways that threaten their existence. In the end, budgets are the ultimate expressions of political values whose contents signify victories for some just as they surely remind others of their defeats.
Because of this, funding mechanisms are never based on rational considerations beyond the political coalitions that yield the eventual formula of who gets what, when, and how. Every program has its constituency and each constituency its own advocates. Program advocates often include legislators who sit on those programs’ committees because they have a strong interest in what that committee does and what that does for their constituency. For example rural legislatures typically like to sit on agricultural committees while urban legislators like to sit on transportation committees. One could argue that the system for funding government activity at every level is by default designed to increase spending in a climate where revenues generally continue to grow as the economy expands. That environment is now gone, and a new reality has emerged.
But might this new reality be ripe for states in particular to reintroduce the Program Planning Budgeting System (PPBS) as a tool to facilitate their reset budgets and to reintroduce rationality to their spending choices? PPBS as budgetary system first appeared in the Federal System via Robert McNamara’s Pentagon in the early sixties as a tool to manage the runaway defence budget Eisenhower had warned about during his farewell address to the nation. US Department of Defense still uses PPBS, particularly in their planning and evaluation of their weapon systems. Many states attempted to use the system, but by the mid-seventies just about all of them had abandoned it. At that time many argued that PPBS was not suited for the imperfect world of politics, and that the cognitive capacity to make it work was lacking. But given the circumstances faced by many governors, maybe its time for rationality to prevail and give politicians political cover to do what they have to do.
True, a vast majority of states are on annual budget cycles that don’t allow the elaborate planning stage necessary for PPBS to work. But given superior computing power that exists today, and an environment that appears politically ready to try new things, why not give it a try?