It was in the mid-1980s when I was called into the City Manager’s office at a medium-sized city in Missouri. I was there as part of a consulting team looking at the IT department and, in my case, the accounting software needs. I wasn’t sure why the City Manager asked to meet with me behind closed doors.
I quickly learned the purpose of the meeting was for the City Manager to vent about the Finance Director. I already knew they did not get along. Well, that’s an understatement. They despised each other. The City Manager came up through the public works channels. The Finance Director, I soon learned from those inside the City and even those in the wider government finance industry, was one of the most obnoxious individuals to ever walk Planet Earth.
The City Manager’s complaints about the FD were laced with fiery profanity. It didn’t take him long to direct the discussion to the GFOA Awards that the CM painted with his hand across an imaginary wall that was ostensibly the finance and accounting hallway. The CM ranted about how much time and money the FD spent on obtaining the awards that, to him, took time away from being productive. Specially, the CM complained about how he was getting no timely and meaningful reports out of the FD. I don’t actually recall my response to him, and I’m not sure he asked for my input. Like I said, he was just venting. Let this story simmer on the back burner for now.
Fast forward about 3+ decades to just a few weeks ago. I was with a group of people that included CMO officials as well as some finance officials. Suddenly, the discussion landed on the GFOA Awards. In a slightly more gentle and professional way, representatives from both disciplines repeated almost verbatim the opinions of the Missouri CM. Without the profanity. One finance professional said he estimates that he dedicates about 2 FTEs to doing nothing but preparing the CAFR and Budget to submit for the GFOA Awards.
Worse, as the discussion unfolded, the time and money were spent to produce two documents that virtually nobody read. Not the Council, the City Manager or anybody else in the City. And even fewer citizens! Profanity almost entered the discussion when the participants started talking about the uselessness of most Performance Measures included in the Budget. One finance official had a PDF of his Budget on the laptop. He counted the pages of PM data and surprised every one in the room that it was about 30+% of the Budget document. And worthless – only done out of duty to satisfy the requirements to earn the GFOA Budget Award.
More than one person in the room said they could produce a much more valuable set of Finance Statements and a better Budget document without the worry of GFOA Awards. The extra time they gained could be used to work on true management reports. One city showed how they actually prepare yet another version of the Budget that is understandable with most of the pertinent information readers need to assess the City’s financial resources.
However, there was one problem revealed. A serious one. The City had so many consecutive years of awards on the walls that it was certain they would be fired if the loss of an award happened on their watch. That was a sobering thought and took a few minutes to soak in. Is that the real reason more people don’t speak up?
It dawned on me that the discussion I am describing, 100% true, is likely to be descriptive of what some City Officials may have been thinking for a long time. I’m even aware I might be ostracized for bringing it up. I must confess it has occurred to me many times in the past three decades – even as I was once a GFOA Reviewer for the Budget Award. So was at least one other person involved in this described discussion.
Separately, I was talking to one of my respected colleagues several months back about how I have grown to really appreciate and use some of the infrastructure and depreciation data included in the otherwise confusing CAFR. I was then shocked when told that he didn’t place much stock in the accuracy of that data and that it was only included to satisfy GASB requirements. I’m still dumbfounded.
I wonder sometimes if we haven’t continued to fall into the “Awards Trap.” Even the Transparency Awards, now the goal of many cities, appears to be adding some flashy stuff that can be more sizzle than steak. After playing around with a few sites, I think the jury is still out. Are you able to make decisions from information or is it simply interesting at best? The hope is that the answer is “both objectives are satisfied.” But I wonder.
A basic dilemma governments face is whether to just add on tasks to staff, especially overhead functions, or to Reallocate Resources. Adding is a computer function. Reallocating Resources is Management in its purest form, often not practiced at all. The companion question regarding information has always been this: “just exactly who would notice if we stopped doing this task or preparing this report?”
Wait, don’t shoot me with the “Rating Agencies Gospel Gun.” I know they are the only readers of the CAFR (along with a few of the larger Bond Holders), and the CAFR Award carries more weight than the Budget Award. But in your heart of hearts, is it time to reconsider the effort and costs of the “Award Trap” and time to Reallocate Resources to something people need, read and use? LFM