2009 GGFOA Annual Conference
John G. Hulsey, CGFM
Jackson County, GA
Learning Objectives
Identify Symptoms & Causes of Fiscal
Stress
 Diagnosis of your Government’s
Fiscal/Budget Situation
 Effective Communication
 Budget Strategies
 Budget Tactics
 Enhanced Interim Financial Reporting

Identifying the Symptoms . . .
Inadequate Cash Flow Needs
 Declining Fund Balance
 Using Reserves to Balance the Budget

Knowing the Causes . . .

Inadequate Reporting/Lack of Good
Information
 Cash Basis Vs. Modified Accrual
Deficit Financing
 Slow Debt Retirement
 Unfunded Accrued Pension Liability

Knowing the Causes . . .

Debt Restructuring
 Deferring more than 35% of Current Debt
Service
Over-reliance on nonrecurring revenue
 Lack of Capital Improvement Plan
 Excess Inter-fund Borrowing with no
Capacity to Repay in the Near Future

Cyclical Vs. Structural Deficits

Knowing the Difference

Cyclical Deficits
 Short-term in nature
 Caused by temporary economic downturns
 Easier to address and weather
Cyclical Vs. Structural Deficits

Structural Deficits
 Long-term in nature
 Caused by long-term gaps between
projected revenue growth and the estimated
cost of government-funded services
 Much more difficult to address
Selecting the Appropriate
Strategy

Cyclical Deficits –
 Use of Reserves – “rainy day funds”
 Freeze on hiring
 Defer capital or maintenance spending
Selecting the Appropriate
Strategy

Structural Deficits –
 Use of Reserves post-pones the problem
and becomes a recipe for fiscal disaster
 Hiring freeze places greater pressure on
staff – leading to turnover
 Deferring infrastructure spending harms the
economic vitality of the community and the
tax base that supports the government
Effective Communication

It is imperative that decision makers
visualize the problem
 Interactive presentations of future financial
positions using different growth scenarios
 Find anecdotal ways to relate the scope and
nature of the problem

Benchmark Data
 Use to show areas of over-expenditure
○ Employees per capita
○ Overtime spending ratios
○ Trends in benefit costs
Effective Communication

Understand what tough times mean for
citizens
 Try to anticipate the unintended
consequences of applying budget strategies
 Trust with citizens is crucial for ongoing
financial stability and short-term political
support
Effective Communication

Understand what tough times mean for
employees
 The most effective and efficient
organizations recognize the value of
employees in achieving the primary purpose
of government, “to serve the citizens”.
Is the Budget Balanced?
“Accuracy above Balance” is the
fundamental rule of budgeting.
If the budget is balanced but not accurate,
it is not balanced!
Know the Budget Environment

It is imperative that you are aware of
State Legislation that will impact the
budget process.
 HB 233 – Moratorium on Digest Value
 Removal of HTRG
Budget Strategies . . .

Prioritize Services
 Entails carefully considering the price($) of
government and results desired
 Essential to eliminating structural deficits
and preventing cyclical deficits from
becoming structural deficits
Budget Strategies . . .

Work with a Citizen Blue Ribbon
Committee
 Leading citizens can provide an outside
perspective on efforts to restore financial
balance
 Build public support for hard choices and
involve in the development of the strategies
Budget Strategies . . .

Seize the Opportunity to Innovate
 A crisis can be the impetus to innovate and
make changes that would be near
impossible in better times.
 Involving and re-focusing employees can be
of great aid in reaching financial stability.
Budget Tactics – Management
Practices

Make Managers Manage
 Layers of control may have built up over
time that are costly to maintain and of limited
effectiveness.

Pursue inter-organizational cooperation
 Cooperate with other organizations to gain
economies of scale
 Joint health insurance purchasing or using
pooled insurance
Budget Tactics – Management
Practices

Enhance Purchasing Practices
 Identify bulk purchases and explore multi-
year contracts to lower cost and explore
long-term contracts to help manage energy
costs
 Standardize and limit the selection available
for office supplies & basic technology
 Utilize Just-in-Time purchasing to reduce
inventory carrying costs and shrinkage
Budget Tactics – Management
Practices

Re-evaluate vendors frequently to verify
value and accuracy.
 Lack of competition can cause complacency
and lead to higher prices.
Budget Tactics – Financial
Planning & Analysis
Divestiture of loss-generating
enterprises
 Identify sources of liquidity

Budget Tactics – Financial
Planning & Analysis

Audit certain routine expenditures
 Pensions and benefits
 Cell phones, pagers, and landline usage
 Office and janitorial supplies
 Publications, travel, and memberships
Review property & liability insurance
schedules for accuracy
 Review insurance claims history

Budget Tactics – Human
Resources and Benefits

Investigate risk management
 Inadequate practices and fraud can
contribute to higher costs
 Use benchmarking to compare your
experiences against those of others

Evaluate overtime usage
 Examine ratio of overtime to regular wages
 Consider alternative scheduling options
Budget Tactics – Human
Resources and Benefits

Re-examine labor structures
 Review all positions for duplication of duties
 Review the use of consultants and
temporary staff
 Use workload indicators to budget staff and
identify targeted reductions

Assess organization structure
Budget Tactics – Human
Resources and Benefits

Integrate Human Resources and
Financial Systems
 Integrated HR and financial data is vital to
decision making

Address health-care costs
 Examine the major drivers of the cost
 Re-evaluate co-payments
 Focus on the greatest needs of the
population and ensure that the plan does not
pay for unused benefits
Budget Tactics – Capital and
Debt

Restructure Debt
 Take advantage of lower interest rates
 Beware of intergenerational inequity issues
 Consider operating impacts on future
budgets (i.e., back-loading a debt issue with
higher principal payments)

Begin comprehensive capital project
planning
 Ensure you understand operating and
maintenance cost of new assets
Budget Tactics – Revenue

Audit revenue sources
 Audit surcharges, franchise fees, etc., to
uncover instances of underpayment
Improve billing and collection
procedures
 Explore fees for services

 Re-visit to ensure existing fee structure is
meeting cost recovery goals
Budget Tactics to Use with
Caution
Offer early retirement program
 Institute hiring/wage freezes
 Furlough Days
 Suspend retirement plan contributions
 Use of fund balance
 Sell assets
 Defer and/or cancel capital projects

Budget Tactics to Use with
Extreme Caution
Make across the board wage cuts
 Make across the board budget cuts
 Levy a broad tax increase

Enhanced Interim Financial
Reporting
Cash Basis Vs. Modified Accrual
 Timely and accurate information

Conclusion
Fiscal stress creates opportunities and
is an opportunity to focus on outcomes
that the citizens really desire
 Know the difference between cyclical
and structural deficits and employ the
budget strategy/tactic to improve your
financial condition

Questions
John G. Hulsey, CGFM
 Jackson County Government
 706-367-1840
 jhulsey@jacksoncountygov.com
