A Day In The Life Of A City Hall Watchdog

By Bill Oakey – June 10, 2015

Part One

I guess today is Wednesday. That’s what it says on the special clock that somebody gave me for a retirement gift in 2007. It shows the days of the week instead of the time, in case you forget. In any case, I got up early this morning so I could eat breakfast downtown and then head to the City Council Budget Work Session.

It was held in a small room across from the City Council chambers. The tables are arranged in a square, so the Council Members can face each other. Looking at that scene made me wonder if the Council Members will be pleased to face the taxpayers when the long hot summer is over and the budget is finalized. I was the first one in the room, except for the guys setting up the video equipment.

Before the meeting got started, I received a bit of very exciting news. It has to do with a newly calculated budget surplus, left over from the current budget. As soon as I receive the details on that, I will post them here. But the subject of budget surpluses leaves a bad taste in my mouth. Last year the Austin American-Statesman reported a $14 million surplus. I urged the readers of the blog to contact the City Council members and implore them not to spend it. We succeeded on that front. The Council pulled back their spending requests and agreed to leave the surplus in a reserve fund. Affordability advocates wanted it to be saved for taxpayer relief, or perhaps transferred to the Water Utility to soften their upcoming rate increase. But neither of those options took place. The surplus was tossed into the available spending pot for last summer’s budget talks. In fact the decision on what to do with the surplus was never mentioned publicly. The existing Financial Services Dept. policy and the city ordinance for budget amendments lack sufficient taxpayer protections. That’s why I have included it in my list of reform proposals.

OK, so back to the square table in the small room and the Budget Work Session. It was not at all what I expected. In my imagination, the Council Members would sit down and start sharing ideas on how to meet the needs of the City, while in the midst of our serious affordability situation. I had hoped that they would bring up cost-saving proposals and perhaps debate them. Those kinds of talks will probably come later. At least I hope so. This morning’s session was a very long staff presentation on their vision of the spending needs for the upcoming fiscal year. I quickly found myself awash in a sea of acronyms and buzzwords. I did not have access to one of the big loose leaf binders that adorned the spaces at the table.

But here’s the bottom line. The word “affordability” never came up. Not even once while I was there. It was all about millions upon millions of dollars in spending needs. Certainly, there will be needs for funding the various departments. But as a retired State employee, I am used to the concept of comparative budget scenarios. There is a baseline budget request that reflects very little increase in overall spending, and then 2 or 3 higher spending options to evaluate as alternatives. If the City has a budget review process of that nature, I am not aware of it. After watching and listening to the proceedings for about an hour, I exited the room and went home.

Part Two

I had a 3:00 afternoon meeting with the Policy Director in Council Member Ellen Troxclair’s office. It was very productive. In fact, I learned a great deal about the complexities of some of my proposals. There are questions to be answered and details to be sorted out. But the willingness of people on the new City Council to consider major reforms is extremely gratifying in its own right. This was a full one-hour meeting. I came away armed with the knowledge that if there are hills to climb, I now have a better map to approach those hills, and perhaps even the right tools to climb partway up some of them. That’s a very good feeling.

Part Three

At 5:27 I received an email from the Budget Adviser to Mayor Steve Adler. He requested some information on my proposal to implement the “Honolulu Plan” to control funds budgeted for vacant staff positions. His timing was great because I had just been informed at my last meeting that there was a potential pitfall. I decided to take a stab at solving the stumbling block, and to lay out an example of how one City department might comply with the new guidelines. But first, you can take a look at the Honolulu news article from 2013 that sparked my proposal. Their City Council grew weary of City departments taking money budgeted for vacant staff positions and spending it for other purposes. They even invoked the term “slush fund.” The situation in Austin has been very similar, with the staff vacancy rate approaching 10% of the total workforce. The reform could yield several millions of dollars in annual savings.

Here is my response to the information request from the Mayor’s Office:

The Austin City Charter allows the City Manager to shift funds within a department as he sees fit. Here is the text of that Charter provision:
Article VII, Section 8, Last Sentence:

    No funds of the city shall be expended nor shall any obligation for the expenditure of money be incurred, except in pursuance of the annual or interim period appropriation ordinance provided by this Charter. At the close of each fiscal year any unencumbered balance of an appropriation shall revert to the fund from which appropriated and may be reappropriated by the city council. The council may transfer any unencumbered appropriation balance or portion thereof from one office, department, or agency to another. The city manager shall have authority, without council approval, to transfer appropriation balances from one expenditure account to another within a single office, department, or agency of the city.

Here is my proposed solution to that City Charter restriction. The City Council should be able to establish a policy that budgeted funds for all vacant staff positions approved in the FY 2016 budget be placed into a single account, to allow the City Council to exercise its oversight authority as manifested in the functions of the Audit and Finance Committee. The single account could be called the Vacant Staff Positions Fund.  Under this policy, all Staff departments would submit their funding requests to fill vacant positions to the staff official who manages the single account. This action would not prevent the City Manager or his staff from transferring funds within any department after they receive these funds. However, the policy would provide a mechanism for the City Council’s Audit and Finance Committee to monitor the flow of the funds. It would provide a solid foundation for good transparency. The City Council also has the authority to ask the City Manager to provide regular summaries of funds budgeted for vacant positions and the categories of expenditures ultimately used for those funds within in each department.
Additionally, I would support a City Council initiated City Charter amendment in the future to amend Article VII, Section 8. This amendment would require the City Manager to utilize budgeted funds for vacant staff positions for only that purpose. But the City Council could approve a different usage of those funds in specific cases, through the standard budget amendment process.
I also learned today that It is very important to give a simplified explanation and clear example of how the Vacant Staff Position Fund would operate.
Here is a hypothetical example:
1. Department X is allocated $10 million for 200 FTE’s in the FY 2016 budget. Of those 200 FTE’s, 170 of them are filled when the budget is adopted. The other 30 of those FTE’s are vacant. In this example, the total budgeted amount for those 30 vacant FTE’s is $1.5 million. This figure is based on a hypothetical average salary of $50,000 per FTE (without fringe benefits, to keep the example simple). The budgeted total for the filled FTE’s is $8.5 million.
2. Throughout FY 2016, Department X would not need to request funds from the central Vacant Staff Positions Fund unless and until it spends the total budgeted amount for the filled positions. in this example, the filled FTE budget is $8.5 million.
3. Therefore, in order to fill a position from the $1.5 million portion of the budget that had been identified as vacant, Department X would need to submit a request to draw funds from the Vacant Staff Positions Fund.
4. As per Article VII, Section 8 of the City Charter, the City Manager could still transfer funds within a department after those funds have been drawn from the Vacant Staff Positions Fund. But the City Council could ask the City Manager to provide summaries of all expenditures of funds that originated from those withdrawals.
A future City Charter amendment, as described above, would be the best-case scenario. With the amendment that I have proposed, the City Manager would have the ability to spend funds from vacant staff positions for other purposes. But to do so would require City Council approval through the standard budget amendment process.
Thanks, and I hope this response will be helpful. Please feel free to contact me at any time with additional questions on any of my affordability proposals.

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