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Best Practices in Action

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While some can talk about “best practices,” others know how to walk the walk as well. In 2018, GFOA recognized nine governments, including three county governments, for translating GFOA recommendations into practice.

The County of San Diego, Calif., Travis County, Texas and Mecklenburg County, N.C. can all serve as a model for other county governments going forward in establishing financial policies, budget monitoring, and using electronic signatures. 

All three documented their approach, the templates and tools that were used, and any lessons learned along the way for GFOA’s Award for Excellence program.

Each government provides an excellent example of a government converting theoretical guidance to practical implementation for the benefit of the organization and the communities that it serves. Here’s a look at all three:

 

County of San Diego, Calif.

Best Practice in Achieving a Structurally Balanced Budget, Adopting Financial Policies, Multi-Year Capital Planning, and Sustainable Pension Benefit Tiers.

For over a decade, the County of San Diego has worked to strategically align assets and liabilities to mitigate both short- and long-term risks and needs.

This has engrained a discipline within county leadership throughout the organization to be consistently mindful of long-term risks when evaluating immediate needs and opportunities. Specifically, the County has taken a long-term approach to align and match assets to growing liabilities, which has resulted in a strategic increase in fund balance done in conjunction with managing growing liabilities in pensions and capital infrastructure renewal.

The County leveraged unanticipated property tax growth during the housing bubble to fund these liabilities. The execution model included:

  • A comprehensive review and codification of financial policies
  • Review and evaluation of short-term needs through the assessment of discretionary services while also considering alternate service delivery models
  • Reducing and avoiding new liabilities in the pension and capital areas through the use of recurring and nonrecurring revenues

As a result, the County was able to:

  • Prepay $422.1 million towards retirement-related costs since 2006
  • Avoid $1.2 billion in costs related to OPEB and implement lower retirement benefit tiers
  • Avoid $1.0 billion in financing costs by paying cash for capital improvements over a 10-year period

 

Travis County (Auditor’s Office), Texas

Best Practice in Using Electronic Signatures

The Travis County Auditor’s Office created an online, fillable form with digital signature capabilities to streamline the process of obtaining “related party” disclosures from current and former County employees in accordance with Governmental Accounting Standards Board Statement (GASB) No. 62 requirements.  The single form incorporated both the actual disclosure certification as well as the list of vendors for the employee to review and check off to indicate any association with a particular vendor.

The prior related party disclosure process was cumbersome and inefficient for both the employee and the Auditor’s Office staff, which contributed to delays in receiving the completed disclosures.

Before the form’s rollout, the Auditor’s Office would email two files to employees for completion, the disclosure form and the vendor list.

Employees would review the vendor list and indicate any vendor with whom there was a relationship and save that file.

Then, the employee would complete the form and manually sign it.

The employee would then return both to the Auditor’s Office via inter-office mail, fax, or scanning/emailing. Once received, the Auditor’s Office would create a digital file of the returned disclosures to archive them.

The project accomplished the following:

  • Replaced manual signatures with digital signatures
  • Reduced or eliminated a unnecessary or redundant process activities
  • Reduced paper use associated with the process
  • Expedited disclosure submissions

 

Mecklenburg County, N.C.

Best Practice in Budget Monitoring

GFOA recommends that all governments establish a formal set of processes for comparing budget to actual results to monitor financial performance. Budget monitoring should include analysis of a diverse set of indicators to best inform the analysis and facilitate evaluation of a government’s overall performance. Establishing and conducting regular budget monitoring provides organizations the opportunity to promptly adjust for any significant variances to ensure continuity of program/ service delivery.

In 2015, Mecklenburg County experienced a drastic drop in federal revenue for one department. Although the Finance Office and Office of Management and Budget (OMB) regularly analyze major revenues from an organization-wide perspective, it was apparent that a more consistent approach was needed to monitor budgets at a department level, and communicate issues early to all decision makers in the organization.

As a result, the Quarterly Budget Monitoring and Reporting Process was developed by the county’s OMB to systematically monitor revenue and expense trends, provide early warning for potential budget issues in the current budget, and consistently communicate  financial status throughout the organization.

The basic steps of the process are:

1. Preparation of an initial report by OMB analysts, including revenue and expense projections, vacancy trends, and select performance metrics and observations

2. Meeting with each department to refine draft report, incorporate feedback, and share observations

3. Conduct a team review and discussion of all department budgets by OMB along with assistant county managers during the third quarter to help inform budget decisions

4. Compile final report that includes both an organization-wide perspective and department level perspective.

5. Present final report to the county manager and executive leadership team which include observation and projections that are used extensively during annual budget deliberations by both departments, OMB and executive leadership.

GFOA is currently accepting applications for the 2019 Awards for Excellence to recognize governments that have demonstrated best practice implementations of financial management.

If your government has demonstrated best practice in financial management we encourage you or your finance officer to apply.

Applications will be accepted online at www.gfoa.org/afe  through March 1.

For more information on the three governments listed, above, please visit www.gfoa.og/afte or contact GFOA at (312) 977-9700 or at research@gfoa.org.

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