King County Budget by brp41697

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									                            NOTHING SHORT OF NEW LEADERSHIP
     Fred Jarrett’s 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 breath 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 county’s fiscal crisis are deep and far reaching. Today’s
unsustainable level of spending and $50 million deficit have been a long time in coming, and now they
threaten the county’s ability to deliver essential regional services.

The status quo – governed by politically expedient short term solutions that postpone but don’t 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 county’s
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 county’s passenger only ferry system on-hold and focus instead on stabilizing Metro’s
     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
     agency’s 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
   employees’ 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 county’s internal service functions out of the dark ages. The county’s 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 people’s “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 county’s budget crisis is self-inflicted. Unrestrained
spending during boom times created a bow-wave that now threatens to engulf the county’s 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 executive’s standard should be lean
staffs and direct involvement if effective service delivery.

Employee benefit costs are another major contributor to the county’s 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 county’s 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
system’s operating cost per hour is 22% above the national average and cost per boarding 38% higher.
More troubling is the fact that growth of Metro’s 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 Metro’s high cost model, to operate a ferry system at the
same time the region’s 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.

								
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