Lake County Fiscal Rangers

Comparing Budget Process Transparency for St. Paul, MN to Lake County School District

After attending all the budget workshops for the Lake County (FL) School District (LCSD) this past year, I have started searching for better examples of budget transparency & budget management by government agencies.   The LCSD system of budget approvals is a mess, and mostly the fault of the outgoing elected Supt., Anna Cowin, and her staff, who use a haphazard system, don't provide complete info to the Board, and do not make it easy for the public to follow the discussions.

So, here is a look at what the City of St. Paul, MN does just to make it much easier for the taxpayer to get meeting notifications and see budget hearing agendas and VIDEOS. LCSD has a total budget of over $650-million, and 5000 employees.  St. Paul has a SMALLER budget and under 3000 employees, but provides significantly better systems and information related to budgets for the taxpayers:

1.  First, you can go to their website and sign up for email notifications on several different types of subjects, INCLUDING notification about budget meetings.  LCSD has NO notification function at all for any issue or meeting - the taxpayer must search the website and find the "special meeting" agendas, open them to see if they include budget topics.   The same for the main Board meetings.  There is a SECRET meeting notification email of a press release with meeting agendas, but you have to know it exists, and get on the email list used by the Supt. office.  Otherwise, you can only look at the calendar on the LCSD website and see if an agenda is posted (not the press release, which lists upcoming and REVISED meeting details).  At the very least, LCSD should create a menu item "Meetings" and provide the most current press release, as well as links to the calendar.  LCSD also needs an email meeting notification subscription feature that visitors can sign up for.

2.  St. Paul uses a very clean website design from a firm specializing in government websites:  http://www.civicplus.com/ .  

3.  I signed up for the SP budget emails, and received a list of planned meeting dates AND budget subjects to be discussed at each specific meeting - the calendar was for several future months.  Upon opening the document they sent me, you can go to THIS link and see all the details.  You can see the dates and agendas for the upcoming meetings, AND you can see and watch videos of the last TWO YEARS worth of specific budget hearings.    In contrast, LCSD doesn't put any committee specific info or agendas on their website.  You can only get a meeting agenda, then search it to find a generic term of what will be covered.   For instance, SP's budget calendar says the specific dept. budgets that will be reviewed at a meeting, but LCSD doesn't provide a clue, not even at the meetings. 

4.  I have found that LCSD budget "hearings" are very hard to follow.  They don't tell the audience what is being discussed, and refer to handouts only given to the Board, staff and unions.  Copies of the handouts are NOT available online or for the public.

5.  St. Paul has a specific budget committee with agendas LIKE THIS DETAILED AGENDA while LCSD has no formal budget committee, thus the budget is mostly reviewed in daytime during scheduled "special meetings" that cover many other topics.   LCSD needs to establish a formal budget committee and hearing process that is separate from all other Board topics. 

6.  St. Paul makes VIDEOS available for each budget committee meeting in the last two years.  They have a cool video interface and good quality video.  (Naturally, this costs some dollars, but if meetings are in the daytime, it is the only way to provide transparency on budgets to people who can only view it at night via the Internet ).  The videos are available at the link in item 3 above.  The video player used also shows the agenda, and you can click on links in the agenda to jump to the video portion related to the agenda item.  WOW!!!

7.  The St. Paul meeting list also has a column for minutes of meetings, but apparently they rely on videos and do not provide meeting transcript minutes.   LCSD creates minutes of meetings, but they can be a MONTH or more before being ready.  In contrast, St. Paul has the meeting video up on the website within two days.

8.  LCSD ONLY provides a copy of the "summary" annual budget HERE, but you have to search for it by flipping through menus under "Finance" to locate it.  The LCSD budget summary is ONLY 15 pages for the $650-million district.  There is no explanation of the budget process or links to budget meeting info.  However, St. Paul provides a 497 page main DETAILED budget page HERE that explains the process, then has links to copies of the budget, scheduled meetings for the upcoming year and links to videos of budget meetings.  This is separate from the page we described above that just lists budget meetings. LCSD needs to provide a main page with an explanation of the budget process, links to scheduled meetings, budget copies, etc.

9.  LCSD commingles normal operating expenses and revenues with capital expenditures.  The result is a distorted "budget total" that can fluctuate wildly from one year to the next depending upon what is being spent on school construction.  IN CONTRAST, St. Paul provides SEPARATE 130 page DETAILED operating and captial expenditure budgets so the operating expenses can be more accurately compared from one year to the next.

Recommendations
It is time LCSD made the meetings and budget hearings more transparent by:
- adding ability for taxpayers to sign up for email notifications of all meetings and press releases.
- creating a separate budget committee like St. Paul with separate meetings and agendas
- posting of TIMELY (within 1-3 days) meeting minutes or videos on the website
- posting of all supporting discussion documents on the website 3-5 days BEFORE the meeting
- posting of all actual meeting presentations, documents on the website by agenda topic within 3-5 days after the budget hearing

- LCSD needs to split out capital budgets and spending from operating budgets and spending so fluctuating capital spending does not distort year to year comparisons.

- LCSD needs to provide the FULL, detailed budget in both proposed, revised and final versions on the website within 3-5 days after creation.  Only providing a 15 page annual budget summary is NOT acceptable.  This should be done for both the operating budget as well as a separate detailed capital budget.

- LCSD needs to add a "budget" homepage with a description of the budget process and timeline, with links to related budget documents, minutes, etc.

- LCSD also needs to research transparency methods used by other agencies, identify the best ones, and implement them.

Next time:
- We will examine actual LCSD budget regulatory formats  vs other agency easier to use examples
- Discuss quality of details provided for budget decisions
- Evaluation of what is NOT presented to the Board for approval.
vj

Outstanding Description of How Federal Tax System Works & Effects of Democrats Tax Policy

A local, active Lake County, FL Republican sent this out, and it is a very good description written by an Economics Professor from Georgia on how the Federal Income Tax system works and the effects of someone like Democrats and Obama on who pays the taxes in the future.  Use this story about taxes when you talk to Democrats who support always "taxing the rich".  

This description also illustrates problems with State Income tax systems.  I moved to FL (no income tax) from California, which had an average of 9-11% State income tax on salaries.  I just read that the Villages has an AVERAGE income of $98,000 per household.  Most in the Villages are retirees.  Do you think they left the higher income tax states to move to Florida and retire JUST for the golf facilities, or also due to the lower (none) income taxes in Florida?  vj

================================================

ON THE WALL

This is the absolute best explanation of how our tax system is “supposed” to work I have ever personally seen, it comes from an Economics professor at the University of Georgia. I encourage you to take the two minutes to read through this brilliant explanation, it is well worth the read. 

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers, he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.!

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

'I only got a dollar out of the $20,'declared the sixth man. He pointed to the tenth man,' but he got $10!'

'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I!'

'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money
between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible

New York Audit Finds Dead Still Collecting Medicaid Payments

This case illustrates how, even at the State level, fraud continues to occur because government officials do NOT implement sound enough business controls to prevent fraud.

In this case, New York State Medicaid auditors found 417 dead people and 912 prison inmates still receiving Medicaid payments even though neither group is supposed to get them.

Officials said 296 of the death cases have been closed and $1.7million recovered from providers, like nursing homes.

Thus, it seems that nursing homes can continue to bill for medicaid for dead patients, and prisons apparently have no downside in failing to report new prison inmates to the Medicaid system so they can be dropped from the rolls.

In my 18 years of government and corporate audit experience, the biggest problem was always that some bureaucrat was not following procedure or using professional level control procedures to prevent such improper payments.  In this case, the nursery homes should be fined twice the overpayments, and the prisons should be billed for the overpayments since neither group followed procedures to minimize the fraudulent payments.

Tough love is needed in government.

Favorite Quote from the article at the link below:

Okay, maybe you're dead or in prison, but it's not all bad news: You may still be collecting Medicaid.

This Medicaid problem compares to the situation in three recent audits at the Lake County School District, which paid for a mentor program improperly, and overpaid a contractor, and allowed someone to manually override payroll systems to overpay staff after they were demoted.  Each of those findings exceeded $500,000 but I don't believe any recoveries have yet been announced.   Lake County officials and staff need to start acting on collection actions like it was their own money, and not "free" money from the taxpayers.
vj

Lake County Board Ignored Personnel Issues Research Report from Lee Johnson

I first covered some details on this Lee Johnson research project around August 18, 2008.   I have more information, PLUS Lee Johnson & I will be on Lake County's radio station, WTLB AM790 tomorrow, Wednesday, October 1 at 11m to noon to discuss this issue as well as Lake County School District fiscal management issues.

A local citizen, Lee Johnson , encountered some data to indicate that employee hiring, firing, promotions and demotions at Lake County Government may be more due to who you knew and friends, than professional skills or evaluations.  It affected a number of fired or laid off County employees and Johnson spent many days using Public Records Requests to get copies of emails, personnel records and other documents that indicate that cronyism seems to be the method of managing personnel at Lake County.

I became involved when Johnson contacted me as the FiscalRangers.com blogger to see some of the details.  As an experienced corporate auditor, the trend of the specific examples uncovered by Johnson seem to indicate numerous violations of standard personnel procedures used by many other large government agencies and corporate employers.

What was amazing (read the details in the attachments at the link below) is that when Lee first approached the County Board members, the County Manager, and the County Attorney, they ignored him, and didn't even start their own investigation.  Lee and I even met with the County Auditor who works within the County Clerk's office (run by the elected County Clerk, Neil Kelly, who was also in the meeting) and asked them to investigate.  They did nothing, saying the Board had to "request" an audit. 

However, recently, the Board did actually request such an audit of the personnel office, so we will monitor what happens.   The incident shows, however, that the County may not be run as well as I originally thought, and that the Board members don't have the experience to even understand when they need to immediately investigate issues like this.

Additionally, Johnson provided the same details to both local newspapers and they haven't done anything, which amazes me.  I know one newspaper which focuses much more on providing transparency on government and information like this, but they aren't in this County, unfortunately.

In contrast to the lack of County Board & Staff action, I have mostly followed the activities of the Lake County School Board, and they are very good and quickly react to issues like this, and they do take action.  Maybe once Jimmy Connor gets on the County Board, he might give them some energy.
vj
See the details at the link below, and also a subsequent overview of Johnson't work from another source, the "Citizens for Better Government".

Hawaiian Grass Roots Group to Hire Corruption Investigation Reporter

It is sometimes interesting to use the search term "corruption" in a database or website and see what comes up.

Doing so in the national employment database www.PrimeCB.com (run by CareerBuilder), I found the following ad for an investigative reporter to research corruption and government management issues in Hawaii for the Grassroot Institute of Hawaii.

The purpose of the Grassroot Institute of Hawaii is to improve the relationship between the government and the people with the objective of improving the effectiveness of the government, the business climate and in some cases, tradition, to foster an atmosphere in Hawaii that results in maximum personal freedom for every individual. We recognize that personal freedom comes with the price of personal responsibility, accountability and respect for others. We believe each person must be free to succeed or fail in building wealth and in relationships with others.

Mission

The mission of the Grassroot Institute of Hawaii is to promote   individual   liberty, the free market and limited accountable government.   Through   research papers, policy briefings, commentaries and conferences,   the   Institute seeks to educate and inform Hawaii's policymakers, news media   and   the general public. Grassroot Institute is a member of the State Policy Network, Townhall.com, Americans for Tax Reform, The Sam Adams Alliance and more. 

See their website at:  http://www.grassrootinstitute.org/

The Institute also created "Grassroot TV", which is a new area on the popular YouTube.com video web site featuring videos relating to public issues in Hawaii and beyond, as well as statements from the Institute on various concerns facing our communities. We have new videos up at Grassroot TV!

                  

• Price Tag of the   Hawaii Legislature: Putting the Cost of a Con-Con in   Perspective
• GRIH Press Conference:   New Native Hawaiian Study

                  

They also loaded up the library at the online TV station with new videos from The Heritage Foundation, Cato Institute, Americans for Tax Reform and more. We are also looking for more videos and ideas for the new site.  Please visit 'Grassroot TV' at http://www.youtube.com/user/GrassrootHawaii.

I know I am going to review their website for ideas.  It seems the Institute might have libertarian leanings, which isn't bad, since they believe in small government.

Click the link below to see the ad.
vj

Orlando Red Light Traffic Cameras Cause Anger & Response

After 1-2 years of rabid Orlando Sentinel support, the city of Orlando (or is it the County?) rolled out red light camera systems at several intersections.

Today's paper said that over 1,000 red light camera tickets have been issued in the first two weeks of the program.  (See article below).

And, amazingly, the Sentinel actually published a factual opinion letter from Greg Mauz explaining all the research to show that red light cameras actually increase accidents due to people looking up, seeing the camera, and slamming on their brakes, causing the car behind them to hit them.

I went through this red light camera program in Orange County, California several years ago.  They had many studies that DID show that accidents went up.  unlike the liberal Sentinel, the "OC" in California had a Libertarian based newspaper, the Register, which published many articles showing the downside of the red light cameras being tested.  Usage fell off after the facts came out.  When the red light issue in Orlando first received Sentinel support, I emailed my opinion that accidents would go up, but the Sentinel didn't even publish any opposition articles.

So, I expect red light intersections with cameras to result in increased accidents... so if you approach one, be very careful, or you could get involved in a rear end accident and suffer whiplash.  The Sentinel article below says there have not been accidents, but that is because few people know about the cameras yet.  As people get tickets and the word spreads, drivers will see them, slam on the brakes and cause accidents.

So, I put Mauz's article at the top and you should read it.  He has factual evidence (ignored by the Sentinel and politicians) to show that accidents will rise.

And, remember, the Sentinel is owned by the Tribune group, which also owns the leftist LA Times - be sure to watch the source of articles they publish (i.e. NT Times articles against McCain, etc) before you accept them as unbiased.
vj

Lake Schools to Charge Clubs for Using Facilities

Lake County School Board member Scott Strong has been pushing a businesslike policy for the schools to charge fees to outside groups for using school facilities.  Apparently not all groups are charged in a consistent manner, and some don't pay at all.   I attended the board workshop where this was discussed, and watched Board Member Jimmy Conners disagree with the policy.

But, it comes down to this... according to Supt. Anna Cowin, they have an existing policy and fee schedule, but not all school Principals enforce charging facility fees to clubs who use school property.  Now, if Cowin is in charge, why didn't she make sure this policy was enforced?  The lack of fee collection results in less funds for school teachers, etc. because the users of facilities use expensive outdoor lighting, and require custodial cleanup services, but apparently many don't pay the costs.

So, kudos to Strong for pushing the issue (even for use of school buses by groups), and the new policy may be decided tonight.  We will miss his pragmatic, business approach to school spending when he leaves office in November.

As for Conner's opposition, it is mostly focused on booster clubs which do raise funds for sports and schools, so maybe they could establish a waiver of facility fees depending on the revenues raised by the booster clubs.   But, a true business person would say, why give a fee break to sports boosters, since education, not sports, should be the main focus of spending for schools. 

See the article at the link below.
vj

Chicago Public School District $137,000 Payroll Check Fraud Reported

The article below describes how two Chicago area school administrators took advantage of a new payroll system and initiated higher than normal paychecks for several employees that totaled $137,000 in return for kickbacks.  Apparently the IT department had not turned on a control routine in the new software and the administrators knew it.  It took SEVEN months before a school principal noticed excess hours on one inflated check and reported it to internal audit for investigation.

This breakdown in controls could have been prevented with simple control totals comparing authorized payroll totals to those on the checks, but apparently the staff didn't understand manual control processes that can be used as an alternative to computerized controls.

Remember, Lake County, FL's School District recently had a situation where "someone" bypassed internal procedures to allow overpayments to several staff who had been moved or demoted to lower paid positions, but the "unauthorized" revisions to payroll continued to pay the employees at the older, higher rate.  I don't believe that situation has yet to be resolved in public.
vj

Lake County School Board Approves $662-million budget

I have been attending all the School District budget workshops (now called "special meetings") for this coming budget, and yesterday, as the article below explains, the School Board approved a budget of $662 million for 2008 (which started LAST JULY) to June, 2009.   So, it only took the administration and Board two months to decide the budget into the new spending year. 

Given the fact that School Supt. Anna Cowin's staff was unorganized, and rarely presented any factual data to support budget justifications (other than verbal, feel good statements), the Board did a good job reviewing many (not all) line item spending plans, and rolling some of them back.  Chairman Larry Metz and board member Cindy Barrow were especially effective in ferreting out some unneeded spending.  However, there were still BS statements from some managers and the Board had to approve some spending that I would have kicked back.   

One confusing factor is that the total budget lumps in capital spending, which is mostly school construction.  So when reporter David Donald says the budget is "about $80 million less than last year's", he doesn't explain much or ALL of the reduction is from a drop in construction spending.   So, it is misleading.   The handout at yesterday's Board meeting only showed future totals and factors, but no comparison data from the past year was provided.  Without comparison data, I get a queasy feeling that the spending may be higher than we think.

But, the Board did actually set aside a full 4% for reserves (not all Counties do that), and did reduce spending below the fore casted break even point, but neither the staff or the Board really provided specifics on what actually was reduced in comparison to the past years, or how much reserves are actually sitting to be gobbled up by the upcoming union salary negotiations.  If we see the Unions getting significant increases, rather than saving the funds in a reserve, we will know who owns the Board.

I am preparing a white paper on needed improvements in the budget and reporting systems for the School District, and will post it in a week or so.   I plan to ask the remaining election candidates for School Board (Brandeburg, Richardson, Stivender and Glass) whether they will commit to implementing them for the next budget "season".  I did give a rough early draft to some candidates, but didn't ask for feedback at that time last month.
vj

New Washington DC School Supt. Shakes up the System

A few months ago, we reported here about a huge corruption scandal affecting the Washington, DC school district.   That district has always been in the news, mostly about failed students and the system.

But, a new School Sheriff is in town, and for the last year she has been stirring the post and fixing things.  Washington DC has a "inner city" school district, which was always very political, and run by a long series of unsuccessful Chancellors.  They even tried a retired military general.  My mother worked in the Los Angeles City School District, which has the same "inner city" problem with discipline, thus many "yuppies" moved out of LA years ago to Orange County. The nearby San Fernando Valley residents tried to withdraw from the LA Unified School District and couldn't get the needed vote several years ago.

The new DC Super is making some big changes, as described in the article link below, but here are some that affect fiscal management and have been TURNED down by Florida teacher unions:

- merit pay - the local Lake County, FL teachers voted 2 to 1 against a recent State provided merit or bonus program for teachers who increased FCAT scores in students. In the article below, the DC Super has implemented merit pay systems, also known as pay for performance, and aims to bring teacher pay up to over $130,000 per year (vs a starting salary in Lake County of about $36,000 and a max of $60,000).  One way to pay for increased merit pay is to eliminate all the helpers, coaches, mentors and consultants, and retain, pay more and hire teachers who have better skills and learn them on their own.  Another way is to hire in experienced teachers or even new teachers with good outside experience (such as scientists, engineers, mathmaticians, business managers) and pay them higher for the experience, instead of forcing them to start at the bottom rung of starting teachers. The current system rewards longevity in lake County, and not outside skills or experience.

- charter schools - the unions want "local control" which would enable union supported School Board candidates to make it much harder to start a charter school, which is regarded as competition for union teacher jobs.

- accountability for student performance - the unions fight No Child left behind, and the FCAT system because they result in measuring performance of teachers.  Recently, unions supported the move to water down the Florida FCAT grading system for High Schools by adding factors that have nothing to do with FCAT exam scores. 

Instead, the DC Super (aka Chancellor),  Michelle Rhee, a Korean-American,  is making these types of changes which make sense to anyone with business background:

- The mayor obtained power to do away with the School Board (not needed for Lake County)

- So far, Rhee has streamlined Washington's central office by firing nearly 100 employees. She dismissed 36 principals she considered ineffective, including one at the elementary school her two daughters attend. She also sent termination letters this summer to 750 teachers and teacher's aides who missed a certification deadline.

- Rhee attributes the change to a culture of accountability — something she is hoping to improve by linking teacher pay to student achievement.

By soliciting donations from the Bill & Melinda Gates Foundation and other groups, Rhee wants to make Washington's teachers among the nation's best-paid with salaries that could reach $131,000.

However, teachers would have to give up seniority and spend a year on probation, exposing them to the possibility of being fired.

Important Quotes:

Students also have suffered because of entrenched cronyism, which has led to incompetent bureaucracy and fiscal mismanagement.

vj