How and Why to Bring Budget Transparency to a City Near You
It's a nice coincidence that, just when I was preparing to write a
blog post about a trendy thing in the corporate world called
"open-book management," the former comptroller of Dixon, IL, Rita
Crundwell, pleaded guilty to a federal fraud charge that she
siphoned more than $53 million from the town of only 16,000 people
(over a period of 21 years), according to <a href="http://articles.chicagotribune.com/2012-11-14/news/ct-met-dixon-treasur…; target="”_blank”">an
article in the Chicago <i>Tribune</i></a>.<br>
<br>
Open-book management is, according to <a href="http://www.economist.com/news/business/21565610-case-stripping-away-sec…; target="”_blank”">an
article in last week's <i>Economist</i></a>, "sharing all or most of a
firm's financial data with employees on a monthly, weekly or even
daily basis." In other words, it's budget transparency. Companies
that practice some form of open-book management include
Harley-Davidson, Southwest Airlines, and King Arthur Flour.<br>
<br>
Most local governments are doing better at placing budget
information online for its employees and citizens. But it is
generally an annual exercise, not an ongoing exercise. In between,
full transparency might get in the way of playing with the numbers
at budget time. In order to allowing playing with numbers (or to
prevent the public from seeing through the numbers by seeing how
money is actually being spent), access to ongoing budget and
spending information is limited to the city or county's financial
personnel, the city or county manager (Dixon doesn't have one;
another problem), and those legislators who may bother to look.<br>
<br>
Even now, here's what you can find on <a href="http://www.discoverdixon.org/component/docman/?Itemid=64" target="”_blank”">the
Dixon website</a>. The last financial statement (and this is
itself unusual) is dated April 2011. There are only two 2012 budget
documents between the annual budgets.<br>
<br>
<b>Monthly Reports</b><br>
But in May 2012, five years of <a href="http://www.discoverdixon.org/component/docman/cat_view/130-treasurer-s-…; target="”_blank”">monthly
Treasurer's Reports</a> were suddenly made available online. Since
May 2012, however, only one monthly report has been made available
online. Well, it's hard to start a new good habit. The city's
financial personnel probably haven't been to the gym for months,
either.<br>
<br>
Monthly reports should be made available to the public the day they
are made available to financial personnel and local legislators.
This should occur at least a few days before each council meeting,
so that the public can review the reports and prepare questions and
comments for the public comment section of the meeting. The website
should also have a detailed guide to reading monthly reports,
budgets, and other financial documents so that the public,
especially journalists and bloggers, can understand what they are
reading, ask intelligent questions, and be expected to deal with
budget issues responsibly.<br>
<br>
It's good to provide a few years' worth of budgets and reports, so
that people can make comparisons and see trends and which numbers
are out of line (or consistently out of line).<br>
<br>
<b>The Benefits of Budget Transparency</b><br>
If Dixon had practiced open-book management, it is likely that the
comptroller would not have gotten away with what she did. In fact,
she probably wouldn't have tried.<br>
<br>
But transparency is not as much about preventing bad apples from
stealing the public blind. It's about preventing officials from
playing with budget numbers so that they can fool the public blind,
and cover up a number of serious problems, including false budget
items, and increased contract numbers, overtime, and pay packages.<br>
<br>
It was by getting access to monthly reports given to the board of finance
(which were not made public in my town) that I learned to understand
and expose the games that were being played with budget figures. And
to change things. Without the monthly reports and years' worth of
budgets (I kept a pile of physical budget proposals in my office), I couldn't have done a thing about what the daily newspaper ended up calling "budget numbers ... as suspect as the people who put the figures together."<br>
<br>
Even still, I was constantly told that I didn't know what I was
talking about. But, of course, I received no help from the financial
personnel. By not making financial information public, financial personnel are complicit in the misuse of budget figures to hide the reality of the government's taxing and expenditures. They have an obligation to let citizens provide oversight and, when they do so, to
know what they are talking about.<br>
<br>
<b>Getting Financial Information Online</b><br>
Budget information did not go
online until I started scanning it and putting it online myself. If
your city or county's financial information is not available online,
ask. Tell the financial personnel about their obligations, about complicity in misconduct. Remind them that budget information is not confidential. And tell them you don't want a Rita Crundwell in your town.<br>
<br>
If they don't comply, FOI the budget and reports (in an electronic format), and put them
online yourself (call the site something like Dixon Financial Info).
Shame them into acting like professionals who believe in citizen
participation. They'll come around.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
<br>
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