King County Budget paper.pages

Document Sample
King County Budget paper.pages Powered By Docstoc
					NOTHING SHORT OF NEW LEADERSHIP

Fred Jarrettʼs Seven-Step Strategy to Embrace Change, Avert Financial Disaster and
Restore Responsibility to the King County Budget

Just several weeks ago state auditors reported a shocking lack of oversight of taxpayer money
and stunning management failures across the breadth of county government. From inadequate
financial controls to lax oversight of construction projects, the audit exposed a system ripe for
waste and abuse, and leadership either unwilling or incapable of averting an approaching
financial disaster.

Even more disturbing was that this news came as a surprise to some of those elected to
oversee county government. The fact is that the roots of the countyʼs fiscal crisis are deep and
far reaching. Todayʼs unsustainable level of spending and $50 million deficit have been a long
time in coming, and now they threaten the countyʼs ability to deliver essential regional services.

The status quo – governed by politically expedient short term solutions that postpone but donʼt
fix the underlying problems – has failed repeatedly to meet the challenge. Nothing short of new
leadership, new vision and decisive action can restore accountability and discipline required to
get the countyʼs fiscal house in order.

Bold Action Beginning Day One
From my first day in office as the new King County Executive, I will commit to a seven-step
strategy to avert financial crisis and put the county on a course to provide the people what they
deserve – world class services and responsible government. This will demand tough decisions
certain to be politically unpopular with the status quo crowd, but that is the kind of job
description the new Executive must embrace.

 1. Stop any new county programs until the budget crisis is resolved: We will focus
    instead on efficiently delivering those important regional services such a criminal and civil
    justice, public health, regional parks, environmental quality and public transportation.

 2. Put the countyʼs passenger only ferry system on-hold and focus instead on
    stabilizing Metroʼs finances. Rather than creating another bureaucracy and hiring more
    staff to operate a county ferry service I will work instead on stabilizing the finances of the
    Metro bus system, bringing that agencyʼs costs under control and focusing county
    transportation resources on the bus system where we can get more service and move
    more people for the dollar. Now is not the time to create a new ferry service while cutting
    more productive Metro bus routes. I will revamp the current system of allocating bus
    services based on an outdated political formula and instead put buses where they work
    best to move the most people, and where we want the system to work focusing
    development in employment and residential centers. I will maintain the status quo
    operations of the current ferry system but stop the hiring of staff for the ferry district group,
    including the $135,000 a year Ferry System Manager. I will also put the ferry system
   capital spending program on hold, including the leasing of any new ferries. After the Metro
   bus system has been stabilized financially, a more comprehensive study of the cost
   effectiveness of passenger only ferry service and delivery systems on Puget Sound and
   on Lake Washington service can be undertaken.

3. Set and enforce accountability and performance standards focused on customer
   service for every county manager and department. We will instill a new sense of
   integrity in budgeting, forecasting and accountability. No longer will the county measure
   programs by how much money is spent or effort exerted but rather by results delivered.
   Managers will be held accountable for their results, not their effort. Performance
   expectations will be established by benchmarking county operations against similar
   services in other organizations, public, private and non-profit, and by asking our customers
   for their opinions. We will enhance transparency and accountability by establishing a web-
   based budget and performance reporting system that will present financial and
   performance information for every service delivered in way citizens can easily understand
   and thereby allow them to hold county government and their elected officials accountable.

4. Aggressively reduce bloated overhead. King County overhead costs have gotten out of
   control. There has been a proliferation of middle management and policy staff positions at
   the county over the past 4 – 5 years. I will undertake an immediate effort to assess how
   many management and policy positions are truly needed and make reductions where
   appropriate. We will pay employees what the market demands so we get good talent but
   our goal will be to reduce the number of employeesʼ not directly delivering service, on
   improving services and reducing their costs. I will also challenge the county council to join
   me in making policy staff reductions. My emphasis will be to flatten the organization and
   put resources into direct services. Our priority will be delivering services to citizens, not
   overhead.

5. Bring all sides together to bring the cost of employee health care under control. I
   will benchmark salaries and benefits with public, private and non-profit sector
   organizations to begin a data based discussion of employee compensation. For example,
   the cost of employee health care has been growing at an unsustainable rate and steps
   need to be taken to rein it in. While the employee wellness program has resulted in some
   savings, the only way to make a significant dent in this area is to institute a program
   whereby employees pay a portion of their health care premium. I will work with the various
   collective bargaining units to change that policy such that all employees contribute to their
   health care premiums. The budget crisis we face demands that we all step up and do our
   part and all county employees must understand the importance of public credibility. The
   credibility is strained when benefit packages stray from accepted regional practices.

6. Bring the countyʼs internal service functions out of the dark ages. The countyʼs
   internal service functions, such as payroll and accounting, are operating in the dark ages.
   For example, the county has hundreds of payroll clerks who manually prepare bi-monthly
   reports to produce employee paychecks. I will bring these and other internal services into
   the 21st century by changing business processes and without developing new systems,
   and thereby streamline operations and greatly reduce overhead costs.
 7. Make regional services a priority, not just a talking point. I will immediately initiate a
    dialog with elected leaders and unincorporated area councils to establish budget and
    performance levels and standards for service delivery in rural areas and develop an urban
    transition strategy. This special cabinet level effort, aimed at speeding the annexation of
    unincorporated area pockets of the county, will help enable the county to more effectively
    meet its obligation to deliver regional services. Simultaneously, I will begin a dialog with
    regional elected and appointed officials about the regional services the county provides or
    could provide which add value to our communities. Examples could include the provision
    of standard geographical information services (GIS) which could save money for cities and
    provide greater value to citizens and organizations who could access a seamless
    information system; and the elimination of services no longer valued by customers. I will
    also make certain our service based budgeting and management system clearly defines
    services as regional, urban or rural.


AVOIDING REALITY: HOW THINGS GOT THIS BAD

They Charged $50 million to the peopleʼs “credit card”...
King County, we have a spending problem. Between 2005 and 2008 the General Fund spending
level grew by 23.3% while revenues increased only 10.3%. General Fund expenditures in 2008
exceeded revenues by almost $50 million. It is clear that the countyʼs budget crisis is self-
inflicted. Unrestrained spending during boom times created a bow-wave that now threatens to
engulf the countyʼs finances. Choices have been made over the past 4 -5 years that led directly
to this crisis. Whether new office buildings or explosion in six-figure middle management
positions, the county has ignored financial consequences and spent its way to fiscal crisis.

...and let overhead costs grow out of control
Between 2005 and 2009 total county overhead spending increased by 28%. From 2006 to 2008
the county workforce grew by 2.2% yet total compensation grew by 6.7%. The largest salary
growth was at the county council and county executive staff which increased by 23.5% and
20.2% respectively.

The County Executive staff grew from 82 to 89 positions over that same period. In 2005, the last
county council budget before voters reduced the size of the council from 13 to 9, the council
budget was $13 million with 121 employees. In 2009, with four fewer council members, the
council budget was $16 million with 117 employees. So, while the voters shrunk the council by
four positions, staff levels remained unchanged and the council budget grew by almost 25%.
Executive Services overhead functions such as Information Technology grew by almost 100
employees during that period.

Controlling executive and council staff is critically important. These staffs set a standard,
communicated through the county government, for how resources are allocated. These staffs
also disconnect and isolate the executive from operations of county government. The
executiveʼs standard should be lean staffs and direct involvement if effective service delivery.
Employee benefit costs are another major contributor to the countyʼs budget crisis. The county
will spend almost $214 million on employee health care in 2009, an increase of 30% over the
past five years. According to the Kaiser Family Foundation and the Health Research and
Education Trust 2008 Survey of Employer Health Benefits, employer health insurance premiums
rose on average less than 17% during the same period.

While the countyʼs wellness program has saved some costs, employees do not pay any share of
their monthly health care premium. Nationally, employees of large firms (more than 200
employees) pay 27% or an average of $3,350 of the premium for family coverage. If King
County employees contributed even 10% of their health care premium the savings would be
about $20 million annually.

METRO TRANSIT / FERRY SYSTEM:
COSTS SURGED AHEAD, LEAVING SERVICE IN THE WAKE

Metro Transit is a high-cost agency. A recent Municipal League study of Metro reported that the
systemʼs operating cost per hour is 22% above the national average and cost per boarding 38%
higher. More troubling is the fact that growth of Metroʼs operating costs is outpacing the level of
service delivered. According to the Municipal League, between 2000 and 2007 operating costs
surged 42% while service hours delivered increased only 8%.

The League also pointed out that the County salary policies and benefit plans is one of the
driving forces of these high costs. And it is not just Metro Transit being impacted by this
unsustainable cost model. Other transit agencies which Metro operates, such as Sound Transit
Express Bus and South Lake Union Streetcar, are under similar pressures driven by the Metro
high-cost structure. Metro will also operate the Central Link light rail and the cost model for that
service is projected to be one of the highest in the country.

Launching a new county bureaucracy, with Metroʼs high cost model, to operate a ferry system at
the same time the regionʼs bus system is facing severe fiscal strain and service cutbacks makes
no sense. There needs to be an honest evaluation of the cost effectiveness and performance
metrics for all proposed ferry segments against alternative bus service and existing ferry service
before committing limited resources to this venture.

THE STATUS QUO – AND LACK OF LEADERSHIP THAT GOT US HERE

King County is faced with a fiscal and management crisis that has been years in the making.
Meaningful oversight has been non-existent. For too long the county has operated as an
opaque bureaucracy with little accountability to citizens. Decisions have been made over the
years that have created a financial bow-wave that now threatens the financial solvency of the
county government. This crisis will not be solved by asking the same people who steered us into
this mess to now solve the problem.

The people of King County deserve new leadership and a new direction – and that is what I
offer.