This document below is reproduced from the separate PAGE on this blog (listed in the page section in the right column). That page will become a living document, and any updates or revisions will be posted there, not here.
vj
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FiscalRangers.com 8-Point Plan and Goals for 2009 for Lake County, Florida Local Government Agencies
In the last 2 1/2 years, I have focused primarily on the Lake County School District fiscal issues. But for 2009, I intend to follow new priorities. There are significant new, or planned improvements in the School District since Anna Cowin left and new Superintendent Moxley took over responsibility. Since she was appointed by the Board, there is much more collaboration and focus on business issues than under Cowin.
Note: Any reader who has relevant facts that might modify my details below should post a comment or send me an email so I can revise the facts as warranted. vj
1. Lake County School District Issues - After two and a half years of attending Lake County School Board meetings and reading financial reports, budgets, etc. I have come to these general conclusions about School District Management in General:
Fiscal Skills of School District "Educator Professionals" Need Significant Improvement:
There is a constant stream of reported fraud and fiscal ineptness reported across the country regarding School Districts. Almost every week another School District fraud or waste issue is reported in the millions on the internet (I get google alerts daily on these issues). It doesn't show up regarding city management (well, except Chicago...) or county management, but mostly school districts. It seems that professional "educators" clearly don't have a "fiscal management gene" or professional standards for accounting, finance and cost control systems that other agencies and corporations are exposed to. They rely on fifty year old budget variance reports that are at the kindergarten level of accounting and performance measurement in comparison to many cities and corporations. Also, it seems that teacher unions control spending demands, and staff don't actively provide approving Boards with contravening facts indicating wage or benefit spending requests are excessive. If you visit the website of the Florida School Superintendent's Association, you won't find any mention of courses, books or performance standards related to financial controls, cost controls or performance management methods. Thus the local school district uses a fifty year old out of date budget variance system to "control" costs. They don't run labor or unit cost or transaction productivity ratios or have reports that show improvements or failures in efficiency, effectiveness or economy of operations.
The Lake County School District IS improving in systems since Anna Cowin left, and I expect to see more improvements in the next few months. Dr. Moxley has stated that she is developing a performance benchmark "dashboard" report which is a significant improvement if implemented. The audit committee NOW has five strong members and is providing fiscal oversight direction and providing input to the Board on the acceptability of audit reports.
BUT, I should NOT have to spend significant time describing to staff or the Board why cost accounting and operational performance tracking is needed in a $650-million organization. EVERY accounting major takes classes in cost accounting and financial analysis. Then, if a government agency like the School District has several accountants and managers, why don't they initiate and implement similar performance reports? Why doesn't the State Auditor General or State CFO require such reports instead of the overly complex, useless CAFR (which is apparently only used by bonding agencies)? I should NOT have to read Board Meeting Packages to detect spending requests for consultants in the "consent agenda" section (which means it will not be discussed in the meeting) where there are no measurable deliverables, or unit service counts defined in order for the consultant to be paid. I should NOT have to spend time locating other agencies that DO publish program results on their websites to show the Board what is done, OR track down other governments that have waste, fraud & abuse hotlines, or performance measurement report examples. I should NOT have to ask why monthly financial reports in 2008 were over 6-months late, or why the Board receives financial reports in the consent agenda and never discusses them in public meetings. These should be done in any agency that is spending $650-million in public funds, and especially where one of the primary, defined duties of Board members is to approve spending and budgets.
Thus, my new mantra is to focus on School District Administrator & Educator Professional weaknesses in the fiscal and performance management area. We can't blame this on public officials when there is no pre-qualification for management skills for elected candidates (yet ... keep tuned, see #4 below). Thus here is my Lake County School District mantras for 2009:
1. Professional School District "Administrators & Educators" (some have a Doctorate in that field) should be embarrassed over their profession's inability or unwillingness to implement well known financial and accounting controls to prevent frauds, scams, lack of state of the art performance tracking systems used by business, and unwillingness of leaders to provide transparency to actual costs and spending "justifications". They need to step up to the plate and learn how business controls expenses of a $100+ million organization and implement such systems in all School Districts.
2.
Elected
School
District Board Officials need to spend more time on
understanding staff spending justifications and challenging weak,
biased ( i.e. towards special interests) or unsubstantiated claims, or
requests. This includes specifying measurable performance
deliverables used by industry or business in all contracts, not just
meeting regulatory requirements for three bids, etc. Government is a
monoply, not subject to business competition, but they should NOT be
considered different and not excluded from using current cost
accounting
practices to ensure operations are subject to the same quality of
efficiency measurements as used by business, and should NOT avoid such
business controls.
2. Lake County Government : I have not spent much time watching the Lake County, FL Board of Commissioner meetings in 2008, but intend to do more in 2009, and recruit volunteers to help. I keep getting calls from voters who ask me to get more involved, especially since Lee Johnson wrote his report in 2008, and because of the continuing trend of mistakes, including the ready mix plant issue, the sole source selection of the Motorola radio system, the failure to implement audit report recommended controls in housing programs, and the $1-million overbudget spending on overtime.
Lake County Government issues (including Constitutional Officers) we will monitor and investigate in 2009 include:
- Follow up on the Lee Johnson study on Lake County Government personnel and other practices reported on this blog. As of January, 2009, the County Auditor in the County Clerk's office planned to initiate a review of the Lee Johnson issues, particularly hiring, firing, promotion and demotion practices, at the request of the Board, especially of the "Employee Resources" department (Human Resources). Then a Collier Court case indicated the Auditor would have to get permission from the County Commission to do the audit, and the Board and staff have refused to approve an unrestricted audit. The Board only submitted a request after substantial exposure of Johnson's report, including two articles in the Lake Section of the Orlando Sentinel, but it has bogged down in haggling over details. NO auditor should agree to restrictions on how they do an audit, but it appears the County Commission is doing so, which raises more red flags.
- Follow up on the recent audit report on SHIP
(State Housing Initiative Partnership) program where prior audit
control recommendations were ignored and it seems that funding may have
been allocated on a preferential and ineffective basis. I spent 2.5
hours in a group meeting with the County Auditor and other citizens
over this, and results indicate a massive ignorance of professional
accounting control methods related to effectiveness, fiscal integrity
and propriety of the program spending. The
draft report was issued August 15, 2008, but County manager Cindy Hall
deferred response to the audit until January 8th, 2009, ALMOST FIVE
MONTHS after the draft, AND AFTER the November election results.
The Audit Department (and the County Clerk) should have issued the
audit report within an audit industry normal 30 days from the draft
date even if the response was not provided. Because of this, it
indicates a widespread reluctance to disclose, discuss or act on
reported internal control problems in the County. I will soon publish
my overview of this audit issue on this blog.
- Examine whether a major control weakness exists in the Lake County Commission side of government, where the accounting is performed in the County Clerk's Office, and there may not be anyone in the Commission side of the agency that has a background in internal accounting controls (like a CFO) who provides fiscal oversight skills to that agency. We did ask the County auditor about this, and he said that accounting (like payables, payroll, etc.) is performed in the City Clerk agency, but they have no oversight or jurisdiction over the internal systems and controls in the Commission. That is like having a County Sherrif who has no jurisdiction in a city and that city has no law enforcement department to prevent crime. This may be why there seem to be so many control failures like the recent one where a department spent more than $1-million in unbudgeted overtime without being detected - the existing staff might not have a clue about how to design and implement financial and work process safeguards to prevent fiscal mistakes.
- Review the selection of the vendor for the $34-million Motorola phone (or radio) system specified by the County without competitive bidding. We have had a number of people question that purchase and have been told that additional spending related to the program may not be disclosed as part of the project. We will also watch to ensure that the system actually works as expected without further spending requirements.
- Review the County audit plan and reports. The "County Auditor" is actually a department in the County Clerk, and has no authority to audit the other Constitutional Officers unless they request an audit. The reports are NOT published on the County Clerk's website and we will evaluate the plan, and also the apparent unwillingness to audit the Board operations without a formal request. The County audit department has a staff of FIVE and not all may be dedicated to operational audit oversight.
- Review and publicize the need for operational audits of the County Constitutional Officer Departments. There are standard financial audits of the department financials, but there have not been ANT operational audits of the Sherrif, Tax Collector, Elections, or Assessor's office for efficiency, effectiveness or economy of operations.
- Review of the budget format and process, similar to the one we did at the School District. We suspect the county is also using obsolete line item budgets and needs to improve performance reporting and budget report formats.
- Timeliness of fiscal reports similar to our concerns for the School District. Why does an elected Board tolerate waiting 9 months for a financial audit of financial reports (like the CAFR) when corporations do it in under 30 days?
- Transparency and availability of fiscal and program status reports on the website. We have examples of other government agencies which do that, but Lake County doesn't.
- Attendance of Board Commissioners at County meetings and work hours. The Commissioners are paid more than $70,000 per year and there is some question whether some of them are actually working full time on County issues. If they are not, the public needs to know to make informed decisions in future elections.
- Effectiveness of programs like business development or affordable housing. If I can research 20 methods used by other agencies to control and establish effective programs, the local "managers" should already have done that and implemented them. After all, they are paid as "professional" managers. If they are NOT practicing best practices or initiating effectiveness of programs used by other agencies (depending on budgets), then we will disclose that. My best tool is the internet and comparing practices between local and other agencies or businesses.
- Cost controls and final costs of the new parking structure, and compliance with contract terms. Are they using sub-contractors who are hiring illegal aliens, which supposedly is prohibited in the master contract. Is the County auditor monitoring construction and have they walked through systems during construction rather than wait until all spending is done to find mistakes, contract non-compliance or overspending?
- Hotline - there is no County hotline to report waste, fraud & abuse. If one is not created using an objective third party to capture ALL complaints, then we will act as one, and advertise our willingness to take complaints to pass on to County management and the auditor.
- Review the internal performance reports for each department and program similar to what we did for the School District, and determine a course of action.
3. North Lake County Hospital District Oversight and other Tax Districts
I just created a separate page to publish information on this taxing District that collected over $12-million in 1-mill property taxes and gave most of it (by law) to three local hospitals without demanding a clear audit trail, defining clearly what allowable expenses were, or asking for voter approval of the drastically increased revenues generated in the last five years. Basically, they have received excess profits (due to rising property valuations) and given them to hospitals which reported over $28-million in profits in 2007 (I think - see the page). Thus, the original purpose to help ensure hospital survival many years ago has morphed into a little known excess profits revenue stream to the hospitals without voter approval. Check the separate page for updates.
4. Establishment of Election Pre-Qualification Education and Assessment of Republican Candidates
This County is primarily controled by Republicans. Currently, any candidate, with any background and education, can sign up and run for office without meeting any type of qualifications. They don't need to demonstrate they actually understand budgeting systems, fiscal oversight, or performance management of operations, but yet they approve spending and the budgets of the $650-million School District, the $200+ million County operations, or cities. They don't need to show they have a TRACK record of understanding budget request data, using technology, or supporting audit reports, cost systems or rejecting unjustified staff spending requests. Under the current system, any "RINO" (Republican in name only, but really a Democrat) can file as a Republican for office and receive Republican Party support without showing evidence they have a track record in adhering to Republican Principles like limited government or controlling of costs. Recently, regarding technology, for instance, I was told that one elected body could not use online calendar systems because some of the officials had so little background in computer technology they couldn't use a PC to make entries on an online calendar. Candidates also can make "experience" or education claims that may not be accurate, and need to be verified.
Candidates need to know sunshine laws and how to initiate policies, procedures, resolutions and laws (i.e. through local legislators) so they can be effective. It is my observation that only some elected officials know how, or initiate actions that benefit voter interests.
Candidates may also be focused on one issue based upon contributions (i.e. who gets money primarily from developers or dentists?), and that needs to be disclosed to voters.
Additionally, there is heavy emphasis by unions and staff in demanding more spending, and elected officials need to learn how to defend taxpayer interests in analyzing such demands, and ensuring staff are not providing biased information.
Thus, I will start publicizing the need for the Republican party (and Democrats) to establish pre-qualification training, assessment and verification programs for all candidates from their respective party to understand their fiscal and budget management duties and how not to get "conned" by staff who have different spending priorities.
If the parties don't initiate objective programs to meet these goals, FiscalRangers will do it.
5. Establishment of a Fiscal Rangers Rating System for local government agencies, staff and elected officials on business and fiscal control issues, skills and processes.
This is needed. There are such independent rating systems for Federal and State programs, and now we need one for Lake County, and I will issue the first report in April, 2009. For instance, the School District now has a strong audit committee and auditor, but there is no such committee in the County Government, and what do you say about a Sherrif department that has never had an operational audit by the "County Auditor".??
6. Cities in Lake County
We have no plans yet to monitor cities. The Orlando Sentinel's columnist Lauren Ritchie, does report some issues. But, I will start collecting some of the stupid city practices or blunders reported in the press. Did we say Leesburg?
7. Need for County Wide Hotline to report Waste, Fraud & Abuse
This is a key control to provide an avenue for staff or citizens to report perceived ethical, fiscal or performance problems. Although I have requested the School District install one for two years, it does not exist, although they do plan to initiate an "ethics policy" which might include a hotline after March 1, 2009. The County government does not have one. In contrast, we reported earlier on this blog that the City of Chicago School District has an Inspector General's hotline that generated more than 700 reports on waste, fraud & abuse and DID result in some prosecutions. Sadly, the State of Florida doesn't have one either - I checked websites for the Dept. of Education, the Auditor General, and the Attorney General. Only one existed to report consumer problems, not waste fraud & abuse. There was an attempt by some Florida legislators in 2007 to pass a law establishing a hotline, but it died in committee. Such a waste, fraud and abuse hotline is needed in Lake County government, including the Constitutional Officers. This is the type of fiscal standard that should be required by the various elected official associations (such as any Association for Superintendents or School District Board Members), but they don't do it.
8. Need for Additional FiscalRanger Volunteers and Publicity
I can't do all this myself, so I will start recruiting volunteers to help, and since the two local newspapers don't publish articles on these issues, I will also work to expand publicity through email newsletters, radio talks, video reports on YouTube and other means in the works. It is high time that local government agencies practice the same type of business and fiscal techniques used by for profit corporations.
2009 Will be an interesting year...!
Vance Jochim
