Tavares, FL January 11, 2018
In the 10+ years of this blog, I have described how local government fails to measure performance like businesses do. A 7-11 store has better tracking of their costs and efficiencies than the County, Sheriff or cities.
The short link to this article is: https://tinyurl.com/LakeCountyEfficiency
As a former Fortune 500 internal audit manager, I used to perform operational audits, aka performance audits, to evaluate efficiency, effectiveness and economy of operations. You do that by running cost and other RATIOS to evaluate efficiences. You personally might run numbers to determine your car's fuel mileage, which can be compared to other vehicles or in a trend to identify the need for a tune up.
Business works like that every day.
But local governments do not. They avoid measuring work, or calculating performance "metrics" to identify if they are efficient, where costs are too high, etc. They only look at budget totals, and might move budget dollars from one operating unit to another, thus that limits the spending.
NOW, however, the taxpayer may get a break because the Lake County, FL government as well as the cities of Tavares, Clermont and Mt. Dora started participating in the "Florida Benchmarking Consortium" (FBC - http://www.flbenchmark.org/ ) run out of the University of Central Florida. Kudos to them for joining the FBC. But "Goofy Freeloader" awards should go to the other cities and Constitutional officers who have NOT joined the program.
There are 50+ Florida cities and county governments participating, and they choose performance areas like Fleet Maintenance, and submit activity data like gallons of fuel used, etc. to the Consortium for collection in a central database.
Then they get a full binder showing how all members did with comparisons to other similar units, including charts showing efficiency measurements. They even have a category to measure performance metrics for "community engagement".
I just saw the first annual report for the fiscal year 2015/2016 issued in December which covers the County and three mentioned cities. Yes, they run a year LATE vs business which might be measuring efficiences in real time or on a weekly basis.
I met with the FBC Executive Director, Susan Boyer, a Lake County resident and former City Manager, including Lady Lake, who also told me (opinions are my own, not hers):
- Florida's FBC is the largest of similar groups in other states, with 50+ members. Similar benchmark groups exist in North Carolina and Tennessee. North Carolina has only 10 members and Tennessee has only 15.
- Cost measurement for local government is a starting trend. Boyer says she expects the GFOA (Government Finance Officers Association) to specify requiring performance benchmarks in local government financial reports within 5 years.
- The report collects and shows data over the most recent three years, known as trend analysis. I rarely see local governments even do that in their proposed or approved budgets. When they ask elected officials to approve a budget, they avoid showing the last 3 years of expenses or revenues for a budget category or department so the staff can move funds around without transparency, or mask fiscal fiascos causing budget over runs (in my experience).
- The County Constitutional officers like Sheriff, do not participate and have refused to do so when asked to join (as a separate member), except the Miami-Dade County Sheriff.
- School Districts are not covered by FBC and do not have a similar program to identify efficiencies. They can waste 50% of the budget and you wouldn't know since performance metrics by department or program are not disclosed.
- People who work in business are familiar with performance improvement systems like "Lean Six Sigma". FBC is initiating training for that for member employees, and some have already attained green or yellow rankings, and are attempting to get black belt ratings. Boyer mentioned that while local governments don't yet focus on cost management, even utilities like FPL require ALL employees to have one of the two lowest level Six Sigma ratings to understand why they are reporting statistics that result in performance reports that identify inefficiencies. If a local utility can do that, why not local governments?
- Local governments provide "services" to taxpayers, thus they track "service areas", even parks and recreation. There are over 30 major service areas, broken out into over 100 sub-categories.
- Elected officials set the budget allocation priorities, thus the FBC data can be used to show how low spending can cause slower response, and how much is needed to justify faster or better service responses. Right now, in my opinion, that is all emotion driven without solid, objective, comparable data to justify good or poor service and identify mis-management.
- Service areas covered by FBC are added when members ask for it. I asked about it, and for some reason, they don't want to measure Facilities efficiency, such as comparing floor space utilization vs population or market cost per square foot like businesses would do. Thus, in my opinion, the true cost of having lots of vacant, hoarded space is not disclosed, nor is there a comparison of square footage allocated per employee, vehicle, etc. Some corporations would charge departments a return on investment internal charge like 6% to reflect the true cost of holding the property, vs selling it an investing the proceeds, but government does not do that.
I plan to meet with each of the four local participants and review their findings. This is the first year, so I expect glitches, such as using different data than another unit, although the FBC has provided pretty detailed definitions of how to collect the data so it is comparable to other units. Addionally, each member chooses which of 30+ cost areas they want to track, and they may start with just a subset that could be just the easy, or non-controversial areas.
I did not pull out any embarrasing cost ratios, and I cannot get a copy without paying more than $500 for it, so I will report further when I meet with each local entity and examine their results. Apparently, THE MEMBERS could provide overview reports of the data from the copyrighted report, so we will see if they are transparent or unwilling to disclose the results.
In the future, you might see bond issues, or voter issues, determined differently based upon whether the local government entity participated in this type of benchmarking consortium.
Imagine how a fiscal watchdog blog could criticise local government elected officials for NOT ensuring participation in such a program.
So, after hundreds of years of local government not measuring performance, taxpayers might finally get efficient and effective local government, which is not possible if you don't measure performance data like a business does.
And, there is NO REASON to pay any government manager a "performance bonus" if there is no performance reporting to show they were efficient, effective and economical in operations like a business is.
Ask your local city or County elected officials about their data, or why they are NOT participating. Ask how they can justify bonuses for government managers if their efficiencies are not tracked to ensure adequate performance.
Ask your Florida legislators why there is no requirement that local governments, including Constitutional offices, have performance benchmarks reported publicly like those shown in the FBC report. Why aren't ALL local government agencies required to have public benchmark reports to show efficiency, effectiveness and economy?
Finally, I have never understood why taxpayers, elected officials and government does not expect "managers" to be able to define and track efficiencies compared to similar groups or industries. If work cannot be measured for value, trends and efficiency, then it should not be budgeted. The Lake County government did try for several years to do their own benchmarks, but several were not that strong, and managers balked at spending time to do so. Thus the FBC provides an easier way, with existing, suggested methods for those managers incapable of figuring how to evaluate their department efficiencies. I applaud every government entity joining the FBC, and the School Districts of Florida and Constitutional Departments need to get on the wagon and develop similar efforts.
Vance Jochim
FiscalRangers.com
