Budget Update

I have learned over many years of directing, participating in, and observing Oregon public sector budget processes that there are a number of legitimate ways to get the job done.  Some organizations start with the idea of how much money is needed to complete a work program, while others begin with the concept of what can they afford to do with the resources they have.  Other approaches include focusing on cutting expenses or looking for ways to increase revenue.  The primary goal of whatever method or combination of methods that are used should be to align expenses with revenues, or more simply, to balance the budget.

Albany’s Budget Committee will be working to achieve this goal over the next few months after they receive a proposed budget from staff.  The guiding principles provided by the City Council will be to:  1) cut expenses; 2) use other reserve funds to offset service level cuts where possible; 3) maintain public safety services at their current reduced levels; and 4) do not use settlement resources reserved for economic development and facility needs.

I believe we can develop a responsible budget that observes these principles and generally maintains existing service levels across city departments.  I do not anticipate the need to close facilities; and, if there is a need for layoffs, the number will be small.  I cannot promise that there will be no need for staff reductions beyond our voluntary separation program, but I am hopeful we can avoid layoffs.

Albany has wisely accumulated a substantial amount of money over a period of many years to be reserved for specific purposes, such as equipment replacement and risk management.  We also received a large financial settlement from PepsiCo after the company chose to walk away from their contract to build a major industrial project here.  The Council understands that treating reserve funds as a revenue source is an unsustainable financial management practice and has emphasized that use of reserves must be a short-term strategy that includes a plan to replace what is used.  The Council also realizes that there is little need to cut services if there are sufficient resources to fund them in the short term and a reasonable plan to sustain them over time.

We will be taking more time to develop and review the budget this year, as many of the choices are likely to be more difficult and carry more consequences than in previous years.  I have been accused of being overly optimistic in the past regarding the budget, and I may be guilty of that charge again.  I prefer acting with a sense of purpose and hope rather than assuming a disagreeable future.

Solving a Problem

A couple of years ago, I noticed an item in our annual performance measurement report from the International City-County Management Association (ICMA) that showed the City of Albany’s use of sick leave to be higher than other reporting cities. I realized there might be a number of reasons why this could be true; so I asked a team of employees to look into the issue and report back with the results.

Producing reliable data takes time, and the team was thorough. They first removed all Family Medical Leave Act (FMLA) absences from the information and then used data from our payroll records to get a better picture of our short-term sick leave usage. The report shows that while some departments have done a good job coding FMLA absences, others have not, and that some employees are abusing our sick leave policies.

FMLA eligible leave are those days that are taken because of a diagnosed problem with either the employee or an eligible member of the employee’s family. I reviewed my own use of sick leave over the past five years and was surprised to find that one year I used about 60 hours. I knew I hadn’t been sick very often during that time, but I remembered my wife had some health problems a few years ago that caused me to use substantially more leave than I normally do. My leave should have been reported as FMLA eligible, but wasn’t. It is to the employee’s advantage to accurately report FMLA eligible sick leave, despite a common misperception to the contrary. Please contact Danette DeSaulnier for a complete explanation of why this is true.

While part of the reason why our sick leave usage is relatively high can be attributed to improper coding, the fact remains that some people are clearly violating our policies to the detriment of the majority who observe the rules. Over the past five years, we have lost roughly ten employees every working day to sick leave; and I believe this is a number that can and should be reduced.

Our citywide average annual sick leave usage has ranged from 50 to 60 hours during the past five years, but this average would be significantly lower if employees who are using as much as four times the mean would change their habits. We found one case, for example, where an employee no longer with the City accumulated the maximum number of sick leave hours and then took just the right number of hours to maintain the maximum every year. In other cases, we have employees routinely using sick leave before and after weekends or holidays.

Each department will be reviewing sick leave usage in the weeks ahead and implementing new procedures to reduce usage. I have no desire to restrict legitimate use of sick leave, but I have a real problem with people who knowingly abuse this benefit threatening the job security of everyone else. Please review the bargaining agreement or city policies that apply to your position and feel free to ask questions of supervisors about appropriate use of sick leave.

The Well Run City

The website that comes up on my browser when I’m using the Internet frequently runs top ten lists of best and worst places to live or restaurants to patronize.  This week the headline “America’s Worst Run Cities” caught my attention, and I’m happy to report no city in the Northwest made the list.

No real criteria are shown for how the cities on the list were selected, but the primary factors seemed to be unemployment rate, per capita income, education levels, violent crime, and bond rating.  While I might agree that these indicators are important in judging whether a city is a good place to live, I have some concerns with using only these measures to determine how well a city is managed.

Good management is really making the best use of the resources available to the organization.  I have worked with some really poor cities in the world where local officials were making heroic efforts to serve their citizens with very limited resources.  I have assisted other cities where corruption, ignorance, and lack of effort were the primary problems.  The poorest cities may have had the worst statistics, but the relatively wealthier places had the biggest management problems.

Determining whether a city is well run requires a comprehensive look at the community and how it compares not only to other cities, but to itself over time.  It also requires reliable data.  Albany uses standards developed by organizations like the Government Finance Officers Association, the American Public Works Association, and the International City/County Management Association, among others, to help us judge how we are doing.  We also do periodic surveys to ask our citizens about their satisfaction with our services, and we hold elections every two years.  Additionally, Albany maintains an independent Audit Committee, which reviews the annual financial audit and insures that the auditors speak directly with policy makers.

I was a little surprised that Detroit was ranked as the second worst run city in the U.S. while Miami ranked first on the list.  Miami is relatively prosperous, has a reasonably good bond rating, and has a declining vacancy rate.  Detroit is a mess, and the best evidence to support that conclusion is decades of declining population.  Every city will experience variations in population over time, but a steady downward trend over an extended period would seem to be a sure sign of management problems. 

 A well run city, in the end, is a place where people want to live.  Albany’s Strategic Plan calls for us to achieve that goal by maintaining safety, a healthy economy, great neighborhoods, and effective government services.  By most measures, the community has been successful over the past decade, although many challenges remain.  I believe we will overcome those challenges by maintaining a commitment to rigorously analyze our weaknesses, measure our performance, and take corrective action when we know there is a need to do so.