Collaboration in Civic Spheres

Archive for the ‘Budget’ Category

Sammamish Mulls Writing Off Developers’ Bad Debt

by Matt Rosenberg April 11th, 2011

SUMMARY: The City Council of Sammamish April 12 will consider a proposed resolution to write off $113,309.55 in bad debts from approximately 30 developers who prior to 2010 didn’t pay service fees owed to the city. For these accounts, reminder letters and collection agency efforts have failed. The resolution would also authorize the city manager to write off future bad debts of up to $10,000 per account after all reasonable efforts to collect have been made.

BACKGROUND: Before 2010, developer fees to the city for public works department review time and for inspections of new projects were billed after construction, with 80 percent paying upon invoice and 20 percent paying late or failing to pay. Starting in 2010, the city began requiring developers to pay up front for all project-related fees. The city has continued trying to collect remaining developer fees owed and has succeeded in some instances but not in others. According to the draft resolution, factors contributing to the bad debts include the economic downturn, foreclosures, and bankruptcies.

KEY LINKS: Uncollectible Accounts Receivable, Staff Memo, City of Sammamish, April 12, 2011

Draft resolution authorizing current and future write-off of bad debt, City of Sammamish, April 12, 2011.

KEY FINDINGS:

  • The city had $376,614.18 in unpaid developer fees dating to before 2010. Of that, $214,681.31 has been collected or adjusted, with another $48,623.32 under review, or to be collected under a payment plan.
  • In a memo to the city manager, the city’s finance director recommends that the balance of the pre-2010 unpaid developer fees owed to the city, $113,309.55, be written off as uncollectible. In the memo the finance director states that a significant amount of staff time has been devoted to collections in the past three years and for these delinquent accounts, reminder letters and collections agency efforts have not yielded payments. The debts that would be classified as uncollectible are distributed among approximately 30 accounts that have been unpaid for more than a year.
  • A resolution to be discussed at a study session of the city council April 12, and voted upon as soon as the council’s April 18 meeting, would approve the write-off of the current bad debts, and give the city manager authority to write off future bad debts of up to $10,000 per account after all reasonable attempts have been made to collect.

The city council study session April 12 begins at 6:30 p.m. at Sammamish City Hall, 801 228th Ave. SE. (Directions).

Report: U.S. Military Must Fix Vaccine Program

by Matt Rosenberg April 6th, 2011

SUMMARY: A new report by a prominent U.S. military medical official, published in an Air Force policy journal, faults the Department of Defense for failing to sufficiently protect the health of U.S. military forces with vaccines for common naturally occuring infectious diseases. The author asserts, and documents that a growing emphasis on perceived threats of biological warfare has drained DoD resources and attention away from the everyday occurrence of infectious diseases – which can diminish the readiness and effectiveness of U.S. military units. He recommends a better cost-benefit calculus be developed, more resources granted to infectious disease vaccines for the military, and management of the two programs merged to support better, more integrated decision-making.

CBO Director Stresses Rising Public Debt, Taxes, Spending

by Matt Rosenberg March 14th, 2011

SUMMARY: In a public presentation and official blog post last week, U.S. Congressional Budget Office Director Douglas W. Elmendorf warned of rising U.S. public debt. It hit $9 trillion or 62 percent of Gross Domestic Product at year-end 2010, and is projected by the CBO to rise to at least 77 percent of GDP by 2021, or nearly 100 percent if certain current tax breaks are extended, raising the risk of a national fiscal crisis. Elmendorf stated that the growing public debt, driven by deficit spending, necessitates hard decisions by Congress about federal budget and tax policies – in order to reverse course and stimulate income growth and investment while maximizing the benefits of federal spending. He stressed that eliminating waste and inefficiency will not be enough to get the nation’s fiscal house in order and accented the recommendations of the Presidentially-appointed National Commission on Fiscal Responsibility and Reform, that Congress should cut spending on federal health care programs, defense, agriculture, and military and civil service retirement, while also ending selected federal tax breaks. He recommends Congress aim to settle on the needed fiscal reforms in the near-term – even if they are implemented more gradually – in order to help stabilize the economy.

Annex North Highline To Seattle? City Council Digs In, Again

by Matt Rosenberg March 1st, 2011

SUMMARY: A Seattle City Council staff report ups the ante on the low-end estimates in a January, 2011 analysis from the administration of Mayor Mike McGinn on the annual and one-time net costs to the city of annexing the 3.55 square mile North Highline area in unincorporated King County. It includes the communities of White Center and Boulevard Park, is home to 20,000 residents and borders Seattle on the southwest. The staff report suggests it’s likely more prudent for the council to replace the Mayor’s best-case scenario of $1.8 million more in annual North Highline costs than annual revenues with an “√§lternative case scenario” of a $4.6 million annual operating shortfall. The report also suggests that the mayor’s $4.7 million best case estimate of one-time North Highline annexation costs be replaced with an alternate case scenario of $8.7 million. Still in place for the council’s review are the high-end estimates identified in the mayor’s report, a $16.8 million annual operating gap and $91.3 million in one-time expenditures, although the council report intimates that $37 million for non-arterial street paving should be shaved off that last number. A council committee and then the full council will decide before the end of March whether to authorize a November election in which North Highline residents would choose whether or not to annex to Seattle. If Seattle fails to annex North Highline, Burien, which borders it on the south, could.

Excess Postal Space Worth $26 Million In Seattle District

by Matt Rosenberg February 28th, 2011

SUMMARY: A recently-issued audit by the Inspector General’s office of the United States Postal Service finds that in the Seattle District, covering Washington and Idaho, mail volume has dropped 22 percent in the last five years and more than 800,000 excess square feet of facility space should be disposed of, saving $26 million over the next 10 years. The USPS Western Area, of which the Seattle District is part, could similarly save $173 million over 10 years. The audit also found that the USPS needs to improve its real estate management system to better identify and dispose of excess property, partly by tracking how long space is underused or vacant, what its condition is, and by marketing it to tenants including other federal agencies.

State Could Save $180 Million Each Two Years In K-12 Employee Health Costs

by Matt Rosenberg February 10th, 2011

SUMMARY: A state performance audit found Washington could save up to $180 million for every two-year budget cycle – enough to pay for 1,000 more teachers and their benefits – if the state implements major organizational reforms in K-12 public school employee health care administration and requires more balanced cost-sharing from K-12 employees.

BACKGROUND: Washington state voters in 2005 passed Initiative 900 which requires the state auditor’s office to conduct or contract out for periodic performance audits, or cost-efficiency and performance assessments of major state, regional or large local government programs. The state auditor’s office hired The Hay Group, experts in assessing health insurance plans and administration, to conduct a review of Washington State’s health benefits program for K-12 public school employees, which is provided through the state’s Public Employee Benefits Board (PEBB). The system paid for $1.21 billion in coverage benefits to K-12 employees in the 2009-2010 school year with workers paying 16 percent of that total. Of the remaining costs, the state paid for 64 percent, local district tax levies 12 percent, and the federal government and other sources eight percent.

KEY LINK: “K-12 Employee Health Benefits,” report for Washington State Auditor, issued 2/8/11.

KEY FINDINGS:

  • The state of Washington provides health care benefits to more than 100,000 K-12 public school employees in 295 different local school districts and nine educational service districts. This is accomplished through the use of more than 1,000 separate benefits funding pools, which pay for more than 200 different health care plans, provided by 10 different insurance companies.
  • The system of 1,000 separate benefits funding pools is overly complicated and cumbersome to administer, and restructuring it could play a large part in helping save the state as much as $90 million annually, or $180 million for each two-year budget cycle in K-12 employee health benefit costs. That’s enough to pay for the salaries and benefits of another 1,000 K-12 public school teachers.
  • Some school districts have as many as 12 different employee health benefits funding pools, each one tied to a different employee collective bargaining unit, and often requiring benefits funding re-allocations several times yearly, which adds to administrative burdens and costs. The Hays Group report recommends a limit of two pools per district, such as one for teachers and another for non-teachers, to increase efficiency, reduce costs, and make premiums more transparent.
  • Part of the savings could be achieved another way, by more balanced cost sharing. Benefit plans for K-12 public school employees in Washington state are on average more generous than typical for other employees. If their benefits were funded at a level no higher than that of the predominant plan used for federal government employees, the state could save $13 million annually.
  • Employee contributions for sole beneficiary coverage are on average lower than typical for other employers (chart); but contributions required for family plans are higher than average (chart).
  • The K-12 public school employee health benefits system in Washington state should be completely re-structured. It should be moved out of PEBB and into a separate self-funding statewide program with its own governing board. Participation could be made mandatory by the legislature, which would achieve greater overall savings, but that approach should be phased in over a period of no less than three years from approval of the reforms.

from K-12 Employee Health Benefits, report for Washington State Auditor, issued 2/8/11

State Auditor Warns City of Ocean Shores About Finances

by Matt Rosenberg January 6th, 2011

SUMMARY: According to a report from the office of Washington State Auditor Brian Sonntag, The City of Ocean Shores has been engaging in poor financial practices, including over-budget spending in its general fund, spending down city cash reserves, depletion of special funds, making inter-fund loans with no plans for repayment, and nearly doubling its debt from 2006 through 2009.

BACKGROUND: The Office of the State Auditor in Washington has raised concerns about expenditures in excess of appropriations and shrinking cash reserves in the City of Ocean Shores in 2006, 2007 and 2008 audits. A recently-released audit covering 2009 and including financial data up to 10/31/10, amplifies and adds to those concerns.

KEY LINK: Financial Statements Audit Report On City Of Ocean Shores, Washington, Washington State Auditor’s Office, 12/20/10

KEY FINDINGS:

  • The city’s long term debt has nearly doubled, from $37.9 million in 2006 to $72.9 million in 2009. Annual debt payments constitute 20 percent of the city’s budget.
  • The city projected higher revenues than were actually received. Turnover in the city’s Finance Director position resulted in the city not getting timely information to help it oversee the budget and coordinate expenditures with income; and led to unauthorized loans from one city fund to another. An example is unauthorized inter-fund loans, without required City Council approval by resolution, of $90,150 in 2007 and $40,870 in 2009 to the city’s Convention and Tourism Fund.
  • As of 10/31/10, the city had 10 special funds with negative balances totaling $1,183,265; the largest negative balance being $698,984 in the Storm Drainage Utility Fund. The deficit funds have been propped up with inter-fund loans from the city’s Water Capital Improvement Fund, but the city has failed to establish debt repayment schedules.
  • The city’s ending cash balance has dwindled from $2.28 million in 2007 to$1.18 million in 2008, to $680,480 in 2009 to $116,651 on 10/31/10. Expenditures have exceeded income in the city’s general fund for three years running, by $144,284 in 2007, $1.482 million in 2008, and $349,122 in 2009.
  • The city is at risk of failing to meet its obligations at current service levels, including inter-fund loan payments, and may have to borrow as a result, adding costs for rate payers and taxpayers. Failure to repay inter-fund loans would constitute permanent diversion of funds.
  • The city should develop a comprehensive, formal written plan to address it’s budgetary woes; to monitor the city’s financial condition to see that plan is followed; and should establish and maintain a debt repayment schedule for inter-fund loans.
  • The city concurs with the audit findings. Council, management and staff ‘”are also very concerned about the city’s financial condition.” The city will aim to boost revenues, cut expenditures and rebuild fund balances.In 2010 the city laid of 10 employees , and other non-public safety employees took 27 unpaid furlough days. In 2010 Ocean Shores voters approved new funding for emergency care and to sustain library operations through 2012. The city pledges to institute robust and transparent monthly financial reporting to improve oversight by staff and elected officials, and to avoid inter-fund lending or at least to formally adopt repayment schedules if it does continue to occur.