Thursday, September 29, 2011

Municipal Auditor General, Part 2

I posted the other day about the Municipal Auditor General - an idea from the premiers office to create an oversight office for municipal spending.  This became a very hot topic and in fact was probably the most significant topic of debate at the UBCM this week .

The UBCM is an annual gathering of ALL municipal and regional district councils in British Columbia, where ideas are exchanged and policies debated .

The MAG issue was before the UBCM having been announced earlier this year by the Premier that the province was considering creating an office of an auditor who would review municipal spending , like we currently have federally or provincially.

Almost immediately there was negative reaction from many municipalities, who were saying this is an attack on municipal autonomy, wasn't necessary and was a waste of taxpayers money.  So the province, via Premier Clark and Minister Ida Chong, have spent some time discussing this recently with UBCM, municipalities and clarifying in the role and intent of the program.  There remains some objection to the idea at the UBCM but the resolution was passed for the executive to continue working with the province on the details of implementation.

This is, in my opinion, the best answer.  I do not share most of the concerns that were expressed by municipalities at the UBCM, and I will explain why.

An attack on municipal autonomy or an erosion of authority.

I guess first you need to know that ANYTHING the province or fed's do is almost immediately objected to as 'downloading' .  Municipal governments have some heavy baggage, maybe some of it rightly so, that they carry and a mis-trust of senior governments.  Key there though is they are just that - senior governments.  We are a child level of government responsible to a provincial legislative process. They set the mandate, parameters, and extent of our authority.  That's how it is, how its always been, its nothing new.  So, that municipal autonomy doesn't really exist, and, even if that is just a poor choice of words, I don't see how having an auditor is an attack on municipal government.  If you have nothing to hide you are not afraid of ANYONE looking at your books and your processes - in fact, this is a great tool that would validate good government.

Not Necessary ?

Well, all you have to do is scan the headlines of the media on any given day, or talk to someone in your neighbourhood about municipal government, and you will almost immediately hear the comment about government waste, out of control spending, etc.  In fact CKNW is running a whole series on the radio on 'waste' that has focused on municipalities.  Again, if you have nothing to hide, then this process will validate your good policy and operational decisions.  If you recognize this as an opportunity to bring some outside expertise in, you may become aware of different ways you could be doing things you never even knew existed.  But if you just complain and/or bury your head in the sand, you are contributing to the mis-trust that exists in the public and the perception that taxpayer money is being wasted.  And that's just really kind of sad.

A waste of money ?

Value and performance audits are rarely a waste of money.  There are very few projects or processes where one WOULDN'T be able to identify areas where things could be done more efficiently or cost effectively.  In the City of Port Moody we receive constant input from EVERY STAFF MEMBER who are encouraged to let us know about areas where they think we  could improve our operations - where we are losing revenue or spending we could curtail or new services we could identify to serve the residents.  So we already have 250 independent reviews happening every day.  Plus the 34,000 odd independent resident reviews.  The MAG has the potential to take input from residents and staff and compare operations in one municipality to those in another to see where improvements could be made.  Having ONE body doing this for every municipality is more efficient that all of us doing it ourselves, and we would never have the reach or resources to do such extensive consultation.  Even when it appears the audit is not cost effective, maybe only saving a little money, if it saves that money repeatedly in the future, then, that is a good thing !  Or, if the audit finds no areas for improvement, then the value is in the re-assurance to the tax payer their money is being well spent.

SO - I am in favour of this, I think its a good idea.  The framework says that the MAG will NOT question policy decisions of a council - ie: if a council decides to build a playground, that decision is not what the audit would examine, it would only be whether the playground was built efficiently.  The UBCM is asking that the MAG be under the guidance of a board that includes municipal representation, this is a great idea.

The province is funding the office, which is great, but, there will of course be a cost to the cities as we have to provide the resources to the MAG in their discovery process.  It's an investment, not wasted, and the efficiency of having this province wide would mean some cities can look where they are already duplicating this level of examination and maybe scale back or integrate.

I am confident a Municipal Auditor General will be a good thing for the cities , if we choose to embrace this as a tool, rather than reject it as an attack.

Monday, September 12, 2011

Municipal Auditor General. A good idea ??

The press has been buzzing the last week or so about a proposal for a municipal auditor general.  Sounds like a great idea.  An auditor that would review the finances of municipalities to ensure that monies are being spent as they were said to have been, and that good value is being obtained for the taxpayer.

Good idea ?  Certainly, if you listen to the headlines and the soundbites it is.

There should never be any objection to another set of eyes or another viewpoint to examine how MILLIONS of taxpayer dollars are spent of course.  We should do all that we can in that regard.

However, it's important to note a few 'weaknesses' in the argument that some are putting forward.

FIRST, and most importantly:  many people would want the auditor general involved because they feel that a municipality , or any government, spent money on something they shouldn't have. And that then gets called 'a waste'. 

Well, because some, or a few, or maybe even one, person doesn't agree with something, doesn't make it a waste.  In a democracy, ideally, the government represents the will of the MAJORITY in their decision making, and sometimes, your idea might not be aligned with the majority.  So you don't get what YOU want... but that doesn't make it a waste.  Democratic elections are supposed to ensure us that we get representation of the people's will in government.

SECOND, and also very important, is to realize that municipal budgets are already independently audited and everything is published in the open.  Now, in large cities, with complex budgets, it may be difficult to drill into every line item and identify the details of the spending - but hopefully council watchers or media/press or even council members will keep their eyes peeled and notice anomalies that should be indicators of a problem. Someone should certainly be asking for more details when, for instance, staff travel goes up 200% in a year or equipment purchases go up significantly. 

In Port Moody, we have a relatively small budget and it is fairly simple to read, however, there are always challenges.  One frustration in any municipality is that when we budget, we budget by activity (ie: parks, operations, utilities, recreation, etc) , but our financial reports we report by revenue and expenses.  It can be very difficult, if not impossible, to match these up (although, of course, someone can because they all draw on the same data).   Particularly challenging in some years because municipalities must balance budgets each year so there are a number of year end transfers to/from reserves for projects that are incomplete, ongoing or not started in the budget year.

We also include members of the general public on our finance committee, which is staff, council and members of the public, reviewing our spending plans each year and drilling into those details. We have a fairly effective system, with lots of 'eyes' on the budget, and we work in a completely open and transparent manner (our finance committee meetings only are closed to the public if we are dealing with specific staffing details or legal matters, and this is VERY seldom).

As I say above - of course, having another set of eyes is always good - particularly if it is a good set of eyes, with experience in municipal issues and the ability to dig into the details.  If the province moves ahead with this, I would say  we should, as a city , support it. 

My first choice, however, is to create what I call a 'sustainability review and audit task force' - a task force consisting of councillors, staff, and outside experts, who can review our processes and projects 'in the rear view mirror', to ensure that we are doing things as optimally, and financially responsibly, as possible, and also that we are meeting our sustainability goals.  They always say 'hindsight is 20/20', so , we should be taking advantage of that clarity, reviewing our processes , and making any improvements for 'next time' that we can.

This will be one of my first priorities following the 2011 municipal elections, to setup this task force and to find the experts to help us improve our processes.