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Introduction: The City Council and Mayor have been unable to eliminate the huge deficit in the City Budget except by calling for the cutting of vital city services and higher taxes. Gerrie Schipske believes that the taxpayers of Long Beach deserve better. That’s why she’s calling on the City Council and Mayor to enact 9 steps to bring accountability and efficiency reforms to City Hall. Gerrie Schipske has taught public policy and public administration, municipal law and organizational theory and behavior at California State University Long Beach for many years and has worked at all levels of government – city, state and federal. She knows that financial stability for Long Beach is a complicated process. But she also knows, that unless the City adopts meaningful reforms that produce accountability and efficiency, the City’s financial problems will continue and worsen over time. Gerrie hopes that you agree that we must stand up and put an end to deficit spending, cutting vital city services and failing to plan for how to pay for the City employees’ pension system…while City spending skyrockets and higher taxes are being planned. Stand up with Gerrie and call for the following reforms:
• Transparency in the Budget – As Proposed and Enacted. On paper the budget may appear “balanced” but during the year the City Manager is authorized to shift monies within and across city departments. The municipal code should be modified to require approval through a Budget Reconciliation Ordinance to address funding any budget account that is over or projected to be over the amount appropriated for the year. The City Manager would have to disclose during each period any funds that have been transferred within or between City departments and provide a running total of reconciliation needed to bring the budget back into balanced that quarter. Quarterly reports should be posted on the City website within 5 days of the closing period each quarter. • Accountability – Require Annual Performance & Cost Audit. City Council should adopt an ordinance requesting the City Auditor to review 20% of all programs’ performance and cost measurements for the year to ensure accuracy and integrity on service results claimed by City Departments. • Independent Council Budget Analyst Office. Council is beholden to the City Manager for all of its budget information. The Council should create its own budget analyst office to perform a thorough exam of the City‘s budget. 2. Establish a “Whistleblower” Hotline to Expose Waste & Fraud • The City Council should enact an ordinance that provides protection to its employees and which sets up a “Whistleblower Hotline” in the City Auditor’s Office. The State and Federal government have enacted legislation to encourage (and to protect) public employees who report waste, fraud, abuse of authority, violation of law, or threat to public health without fear of retribution. These governmental levels enacted “Whistleblower” laws because public servants best serve the citizenry when they can be candid and honest without reservation in conducting the people's business. • The Auditor would be required to investigate the complaint within 30 days of receiving it, providing there is sufficient information and/or documentation provided, and would then report to the City Manager, the City Council and the Mayor and the City Attorney if the investigation reveals wrong doing. If it is of a criminal nature, the complaint would be referred to the District Attorney. • The source of complaints would remain confidential and reprisal against the employee making the complaint would be prohibited. Employees could file complaints in writing, on the telephone or via email. 3. Conduct an Independent Audit of the City Enterprise and • An audit must be done to determine if the City is transferring monies out of the Enterprise and Special Funds to balance the General Fund’s budget. Enterprise Funds and Special Funds have clearly defined purposes and are protected under Proposition 218’s amendments to the State Constitution. Pursuant to Prop 218, fees collected by the City for the support of these funds (such as Water, and sewer fees paid by the Long Beach resident each month) are to be used solely for expenses related to the specific services for which the fee was assessed. In other words, if Long Beach were transferring money out of sewer funds for other uses, it would inflate the costs of sewer services with excess charges constituting a hidden tax to Long Beach homeowners. Specific areas to audit: • Internal Services Transfers. Are the monies transferred for support services accompanied by documentation? Enterprise Funds are charged for personnel, legal counsel, facilities maintenance, info technology, etc. Are these charges justified? • Reassignment of City Employees. Are employees being transferred from General Fund to Special or Enterprise Funds with a redefinition of responsibilities secured for each staff person? • Charges to Enterprise and Special Fund accounts. Is the City charging the fair market rate for the services it provides or the personnel it transfers? Were the Enterprise and Special Fund accounts charged for this support service prior to 1979 – the passage of Prop 13 and at what rate? 4. Reorganize City Government and Streamline Overhead Costs It is difficult to reduce the costs of City services when the costs of providing service is increased by overhead or administrative or other functions being duplicated in several city departments. This fragmentation leads to a lack of accountability. • Establish a Shared Operations Services Department by consolidating Financial Management, Human Resources, Civil Service, and Technology Services departments. SOS Department would provide all performance management, financial management, information technology services, procurement and other functions on a centralized shared basis. Currently these 4 departments have 389 staff. Additionally, most city departments also have staff that perform personnel and payroll, budgeting and information technology functions which could be eliminated. • Establish a Public Infrastructure Department by consolidating Public Works, Planning and Building, Gas/Energy and Water departments. A Public Infrastructure Department would provide all services related to construction, engineering, pipeline maintenance, street and sewer repair, gas, water and refuse utilities, etc. Currently the Public Works, Gas/Energy and Water departments utilize separate staff and equipment to perform similar functions related to the repair of streets and pipelines. These 4 departments have 1334 staff. 5. Establish an Employee Incentive Fund to Encourage Creative Cost Saving Ideas One way to improve City government and achieve the efficiencies needed to reduce costs is to encourage the involvement of City employees in the development of innovative ideas that will increase the productivity and service level of City government while decreasing the costs. The City Council should enact an ordinance to: • Establish a Cost Reduction Employee Incentive Fund that rewards innovative ideas or concepts that must result in identifiable, extraordinary savings to the City.
the amount of funds returned to the taxpayer, retained by a department, and awarded to the employee in accordance with a formula. o Excluded ideas under this program include those that are a result of normal, progressive business evolution or obvious solutions to mandated budget cuts; result in cost avoidance or revenue enhancement; and have an adverse cost impact on other city departments. o The cost savings should be calculated to be the difference between the anticipated actual expenditures for the particular item(s) or activity prior to the implementation and the actual expenditures subsequent to the implementation for the first full 12 months. o All employee incentive programs shall contain language that prohibits retaliation against any employee for initiating an idea or participating in this employee incentive program. o Employees and the awarded ideas should be recognized through a City Council and Mayor Star Awards. o Employees will receive an award amount calculated on the basis of up to10 percent of the first 12 months’ savings not to exceed a total amount of $2,000 to each eligible employee. o Awards may be made in installments during the 12 months or in a lump sum payment subsequent to the 12-month period. o Departments will have maximum flexibility within the parameters established by state guidelines. o The innovative idea or concept proposed must be approved and implemented by the department head. o 25% of the cost-savings would be returned to the General Fund; 50% would be retained by the Department in which the cost-savings occurred; and 25% would be utilized for the Employee Incentives. 6. Prevent Unfunded Liabilities in the City Pensions City employees deserve fair and competitive wages and retirement benefits. Wages and benefits are collectively bargained for by the employee unions and City management and are then approved during regularly scheduled Council meetings. Over the past years, the City has negotiated with employees to forgo wage increases in return for a better retirement plan. (A plan that by the way is also given to City Management, the Council-Mayor and staff.) Forgoing wage increases helped the City balance its budget in the short-run. At the same time, PERS, the state retirement system used by the City of Long Beach, realized strong returns on its investments of retirement funds and for an extensive period, did not require Long Beach to pay into the retirement fund. The City still did have to forward the employees’ contributions to PERS. Instead of putting monies aside for when PERS would be no longer “super funded” the City spent the money. Today, the bill is due for these increases and the City must find a way to pay for it. • Adopt a City Charter amendment requiring the Council to at alll times set aside funds to pay for pension liabilities. Common sense should have told the Council that the “super funding” of PERS would not last and that by increasing the retirement benefits, eventually a higher amount of funds would be due to PERS. A Charter amendment would require that the Council set aside funds to pay for pension liabilities even if PERS determines that the City is “super funded” and is not required in a specific year to contribute the employers’ portion to the funds. • Request PERS to “fresh start” the City’s actuarial liability. This allows the City to spread out its liabilities over a longer period of time at a lower annual amount of payments due to the funds. • Eliminate the City Council and City management’s conflict of interest. The Council should adopt a rule prohibiting Council, Mayor and their staff from receiving pension benefit improvements approved by the Council during their tenure of service. The Council should also direct the City Manager that management level employees no longer automatically receive the same retirement benefits as management has negotiated with non-management employees. This “me too” practice was one of the major reasons the former City Manager encouraged an increase in retirement benefits because he too would receive the higher benefits 7. Reduce Corporate Welfare & Subsidies to Special Interests During the budget process the City Council called for a number cuts to services including library hours, crossing guards, park rangers, fire equipment, etc. There was no call for cutting the millions of dollars spent on special interests through the “Special Advertising and Promotions Fund.” This fund is used to pay for such items as a float in the Rose Parade ($115,000); Mayor and City Council Grand Prix Events ($35,000); Public Corporation for the Arts Support ($150,000); Long Beach Junior Concert Band ($100,000); Special Events and Filming ($652,213) and the Long Beach Convention and Visitors Bureau ($3,729,000). According to a report by the City Auditor, over the past five years, the City has incurred a net loss of about $1.5 million in its dealings with the Ice Dogs. The City is also apparently owed $3.4 million improperly applied rent credits taken by the operators of the Queen Mary who have recently filed bankruptcy. It does not make sense for the City to subsidize these businesses while cutting back on basic services to its residents. • Achieve full cost recovery on special events. The budget is not transparent about whether or not the City recovers the full cost of General Fund expenses associated with special events – whether sponsored by for profit or non-profit groups. Special events require support by city departments – police, fire and public works – usually at overtime rates. The Council should instruct the City Manager to develop a plan that calls for the full cost recovery of all General Fund expenditures associated with special events. Each special event should be reported on fully by the City Manager immediately following the event. • Expand Corporate Sponsorships to Increase “Give Back” to the Community Opportunities for Business. Providing business with opportunities to “give back” to the City can be an important source of revenue for the City. Many cities are allowing corporate sponsorship of events or needed equipment. Long Beach could certainly raise revenue by allowing corporate sponsorships of such events as the Concerts in the Park, Beach Clean Up Days, or a Long Beach Cares day at which corporations and business could sponsor teams to spend the day painting, planting and making a difference in Long Beach. The City must be careful and conservative in the type of corporate sponsorships it markets but certainly should explore what opportunities might be available. 8. Cut Council and Mayor Staff Size and Expenditures and End Automatic Pay Raises The FY 2005 City Budget indicates that the Mayor and City Council were appropriated $4.3 million and 53.1 staff. While their budget amounts to @ 1% of the total City Budget, the Mayor and Council called for cuts in libraries, crossing guards, fire trucks, park rangers, etc., but didn’t call for serious cuts in their own budget or staff. See their pattern below for the last 4 budgets: Additionally, instead of providing a fixed, equal allocation of money for each council person to spend on expenses and staff, each council member is allowed to submit his or her own budget—even though each council member represents the same amount of residents. Figures for 2005 and projected 2006 are not available. But amounts posted on LBReport.com for FY 2004 show that the Mayor topped the list with a budget of $810,586; while the 9 council members’ budgets varied from a low of $287,984 to a high of $365,324. Despite budget deficits for the past several years, the Mayor and Council have received automatic pay raises as a result of a voter passed initiative several years ago (when budget problems were not so serious.) Several council members have given their raise back” by donating it to charity (which gives them a tax deduction.) But the problem remains that the Council and Mayor are rewarded with pay increases despite obvious failure to manage city resources and the dollars wisely. • Equalize funding for the City Council Offices. A reduced, standard allotment should be established for each of the 9 council members in order to provide equal representation and equal services across the City. The Mayor’s budget should only amount to 2x a council member’s budget. • Require transparency in the Council-Mayor budget. The public budget summaries do not disclose the specific amounts of money spent by each council member and the mayor, nor it is easy for residents to find out how the moneys were spent. The Council and Mayor should post these figures quarterly on their websites. • Prohibit out of state travel during the last 12 months of a council person or Mayor’s term in office. Due to voter approved term limits, the Mayor and City Council are limited to two - four year terms in office. Those who are termed out should be prohibited from utilizing City funds for out of state travel in the last 12 months of their term of office. Travel for other members should also be kept to a minimum and only for those conferences, conventions, meetings and seminars which provide information essential to the effective functioning of the City of Long Beach. • Allow voters to approve City Council-Mayor salaries and benefit packages every 2 years. Voters should have the right to approve the salary and benefits of the City Council and Mayor every two years and make their decisions based upon the fiscal health of the City at that time. Certainly if the Council can place on the ballot a proposal to raise taxes to pay for our libraries, then the voters can be asked to approve or disapprove any increases in Council-Mayor budgets. 9. Enact a TINCUP (Time Is Now To Clean Up Politics) campaign finance ordinance that requires disclose of campaign contributions prior to votes by the City Council Local residents are becoming more concerned about who impacts the decisions made by the city council. Although Long Beach has done a great job in campaign finance reform by limiting campaign contributions, a TINCUP (Time Is Now To Clean Up Politics) ordinance would let voters know exactly who is giving money to council members and for what issues. The ordinance would prove voters with a “conflicts check.” The Long Beach City Council must enact an ordinance that would: • Require council members to publicly disclose at the time they vote on an issue if they have accepted more than $500 in political contributions from any person or organization related to the issue during the previous four years. • The ordinance would also prohibit council members from voting on matters involving people and organizations from whom council members have accepted more than $1,200 in political contributions during the previous four years. Such political contributions would include those made to a council member for all their political campaigns during the previous four years. • Penalties would be assessed on council members who do not comply with the ordinance, including perhaps a financial fine. • The city clerk and city prosecutor would be responsible for enforcing the law. The city clerk currently receives the campaign reports from each council member and would need to calculate the total contributions received by a council member from a single source. Council members who seek other offices or who sought other office prior to being elected to city council in the previous four years of the vote, would have to provide the city clerk with those campaign reports as well. The TinCup ordinance is patterned after a movement started by Shirley Grindle in Orange County to stem the influence of campaign contributions on the decision making of elected officials. TIN CUP stands for Time Is Now to Clean Up Politics. While campaign contributions are limited to $300 for council members in the primary and $300 in the run-off, due to term limits, more and more council members run for other offices while sitting on the council or prior to winning a seat on the council. In those races, the contribution limits are much higher and are often given by the same people and organizations that have issues before the city council. Conceivably a council member could receive far in excess of $1,200 during four years depending on what political offices he or she seek. Voters would have to spend an inordinate amount of time tracking all these contributions to analyze the impact on a particular politician. TINCUP would make the politician do the work. While enforcing the ordinance will be a time-consuming process, it will provide incredible accountability and a transparency that voters deserve to have. This concept can be adopted at state and federal levels as well. Please contact Gerrie Schipske for City Council with your ideas on how we can bring accountability and efficiency reforms to Long Beach City Government. You can take action now! |
| Gerrie Schipske's 9 Steps To Bring Accountability & Efficiency Reforms to City Hall |
| Year |
FY 02 |
FY 03 |
FY 04 |
FY 05 |
| Staff |
53.9 |
55.6 |
52.01 |
53.1 |
| Budget |
$4.5 M |
$3.89 M |
$3.9 M |
$4.3 M |