Making Sense of Our Dollars
Updated: Feb 26, 2021
At the risk of dating myself, on Saturday mornings growing up, amongst the cartoon shows was a short series called Schoolhouse Rocks. That series taught many of my generation their multiplication tables and basic tenants of democracy -- who can forget the "I'm Just a Bill" Song? The words to the intro theme state the purpose of the show including, "It's great to learn, because knowledge is power." As I grew up, I learned that other powerful people firmly believed in the power of informing the public:
Thomas Jefferson wrote: "A well informed citizenry is the best defense against tyranny."
Albert Einstein said: "We believe that a well informed citizenry will act for life, not for death."
And Ralph Nader said: "Nothing can stop the power of an informed citizenry when it is empowered, organized, and motivated."
The past 10 months (from May 2020 to February 2021) have been a learning experience for me. My process began with a simple question -- what happened that got us to the place where our Village President was videod yelling at the chief of police on May 4th. For me it began with trying to mitigate risk -- risk of suit, risk to the employees, risk to the village. Over the intervening 10 months, I've learned so much and every time I dig into a question it just keeps getting deeper and deeper. Often I find more questions than answers -- and if I get answers it either opens a new rabbit trail OR it just keeps getting more and more concerning.
So -- lately I've tried to really focus on the money. Wasn't that the famous statement from Watergate -- "Follow the money" and while a suit from a harassed employee could potentially cost the village a lot of money -- mismanagement of our tax funds seems to be one of the biggest concerns of the people I've spoken to. We don't need a Dixon level theft of public funds, a slow leak of money by simple poor management with a budget that isn't large (by municipal standards) is a huge risk. It would be like bankruptcy by a thousand tiny errors.
I've been reaching out to our CAO/Finance Director/Budget Officer/HR Director/Interim Clerk/FOIA Officer (I assume she has to be our Interim Clerk, since they only named a deputy and the deputy MUST work on behalf of an actual clerk) for months now. I've been able to have a few emails exchanged, a promise of a meeting to review all of my questions on the finances, and exactly 1 short phone call. It was during this phone call in December that she informed me that she has an "extensive finance background" and "knew more about municipal finance than our prior CPA." She also mentioned that it was "good I was asking questions" because if I got elected it would be helpful to know what was going on. She's not returned a phone call from me since then. I'm still waiting to chat with her.
On Sunday, in my board packet review, I called out $95,257.50 more in the October YTD financials than should have been there based on September YTD plus October activity. A Trustee reached out and asked for me detail, which I've provided and I believe that was then provided to our CAO/Finance Director/Budget Officer/HR Director/Interim Clerk/FOIA Officer.
Because I believe in transparency and not just the lip service to it, here's my spreadsheet review. The September's YTD column comes directly from the board approved financials from the 1/12/21 board meeting. It is my understanding that should there need to be adjustments after the board approves the financials, they would need to be amended and presented to the board. To not disclose any changes would be hiding those changes from the board (and the public) and would be incredibly similar to altering the minutes of a meeting from 18 months ago to fit a narrative you created because you think that's the better plan than owning and fixing your mistake in the first place.
October Activity and October YTD come directly from the most recent board packet. As I've had to hand type these numbers in, it's possible that I have a typo -- but I did do a double check and believe these to be fairly accurate. I then wrote a quick formula that checked if September YTD + October Activity = October YTD. If it did not, the formula resulted "Fail" and gives a Delta. A positive number in the delta means that October is HIGHER than the sum of Sept YTD plus Oct Activity (meaning that there's a transaction that has been added after the board approved the financials -- and they were NOT informed); a negative number means that there's been a transaction removed from approved financials -- and again the board/public not informed.
Some of the amounts are fairly small -- but some are disturbingly large. It doesn't take being a financial genius* to operate a calculator and realize that these financials are not "true & correct" as Phil claimed in the meeting. And before our CAO/Finance Director/Budget Officer/HR Director/Interim Clerk/FOIA Officer claims this is all due to a former employee, I'd like to remind her that her role as Finance Director requires that SHE review and approve these financials before they go to the board -- so where's that oversight? Oh, and don't we have Mrs. Trustee Berman, Treasurer who also should review these financials, right??
But remember those rabbit trails I mentioned and how learning one thing keeps leading to more and more things. So, with October being 6 months into our fiscal year, I thought it would be good to look at how we are tracking to budget. Since we never got the full budget review that another Trustee requested in late summer, I thought I'd give it a quick shot.
First, let's level set -- from our Budget -- our board approved a budget that is $305,679 in the red for the General Fund. Basically, the budget was PLANNED to spend more than we expected to bring in.
So -- if every penny is spent that was budgeted without an unexpected revenue, we will lose $305,000 from our reserves. At an average of $12,000 how many RedTail lots would we need to sell? 25. We don't own 25 RedTail lots to sell -- so those sales aren't going to balance our budget, are they?
Next, Let's look at spending where there was NO budget: The total is $137,536.71 of our money has been spent without having ANY budget for it prior to spending it. There are 41 separate GL line items that were never budgeted, nor have an amended budget (as one might expect when you suddenly start spending money you haven't planned to spend.
Remember the IL Code is very clear that in order for a municipality to spend money, they FIRST need to appropriate that money (Budget for it). While there's a case to be made for emergencies, emergencies, by definition should not happen all the time. Do you think any of these line items are really emergencies or just failures to plan?
Finally, where have we OVER spent? I added a column for these expenses that shows the % over the budget we've over spent. In total, we've spent $213,989 over budget across 51 line items. And remember we are only halfway through the fiscal year in spending. I highlighted those line items that are greater than 10% over budget. Some of these are double the budgeted amount and while I might understand cleaning supplies this year being much higher than expected -- some of these just do not make sense. Like why is dispatch services over budget? That's a contract price -- a price that is set and should not change -- so why?
I'm sharing my work so that everyone can fully see how I got to my statements that something is wrong. This isn't rocket science or even deep regression analysis -- this is simple math. I like to think of this like this --- if this was my personal budget would this fly in my house? Simple answer no. There's no way, I'd be able to live like this -- not because I have a deep desire to micromanage my budget; but because this leads to spending more than you bring in. When that happens long enough, you can no longer pay your bills. At the core of being fiscally responsible, you spend LESS than you make. In your personal finances, if you do that long enough, you will build wealth. When a municipality does that long enough, they can suddenly afford big projects, like streets and roads; sewer maintenance; police cars; and have a comprehensive plan to maintain every asset within the village.
While I prefer to believe that knowledge is power and that having informed residents only strengthens and builds confidence in our community, I think Phil and team subscribe to another author's view on informed decision making:
"Informed decision-making comes from a long tradition of guessing and then blaming others for inadequate results." -- Scott Adams (Creator of Dilbert)
*No, Mr. Berman, I'm not a financial genius. I hold a Business Degree in Marketing from one of the best business schools in the Southeast and an Economics Minor. I've been working in business for my entire career -- whether it was for other businesses or when I owned my own franchise for the period of time my son was young. I've been responsible for a P&L in many of my roles --- but none of that matters. What matters is that I'm more than capable of using a calculator and asking questions. When questions bother you as a public official, you are no longer doing your job. It is not just my right to question my elected officials, it is my responsibility as a citizen. Your job is not to obscure your work from me -- it is to convince me that you have nothing to hide. Everything you, Phil, Doug, Brian, Pam and Jeannine have done in the past 10 months screams you have something to hide.