LETTER TO THE EDITOR: Centralized financing

I want to thank each and every one in attendance today. I appreciate you coming out and seeing, first hand, how your local government functions. It's much better to see first-hand than to hear from someone else's viewpoint.

A few months ago I asked to have a conversation on Centralized Financing. There were several reasons for doing so. I had the opportunity to serve on the Cannon County Audit Committee and by doing so, I became familiar with our finance processes. I then served my 3rd year on the Budget Committee and witnessed the decision process and how funds are appropriated. Still another reason was feeling the pain of the State Comptroller's wrath of our actions in 2016. And, I believe Centralized Financing should be the decision of the County Commission.

The consideration of Centralized Financing was first brought to light after the annual Audit Report of 2011. That Audit Report was accompanied by a Special Report from Justin Wilson, the State Comptroller. This Special Report, that made media headlines all across Middle Tennessee, was related to issues found within the REACH program. Phrases commonly used in the Finding's descriptions are:

• lack of oversight

• failure to provide oversight

• lack of management oversight

• management failed to hold spending limits authorized by the County Commission

• unauthorized expenditures

• deficiency in internal controls

• failure to correct the finding noted in the prior year report

• deficiency in purchasing procedures

• and other unflattering terms.

One of the recommendations to address the out-of-control Findings was to form an Audit Committee. That recommendation was approved by the commission and the first Audit Committee meeting took place in January 2012.

Soon after the Cannon County Audit Committee was formed, the Cannon County Commission requested that the committee undertake a study on Centralized Financing and present their findings before the commission by year end. In October 2012, an independent report on Centralized Financing was presented. Due to changes in the commission membership thereafter, there was no further action taken. I was the Audit Committee Chairman at that time and., of course, became familiar with Centralized Financing.

A variety of issues has surfaced within our financing, purchasing and general operational processes. This is only a partial list of what has been witnessed:
Since 2010, our county has been hit with at least 64 financial + purchasing-related Findings by the Comptroller's office. While the officials have worked very well with the Audit Committee to improve processes, reducing and even eliminating the amount of Findings, there are still issues that have not been corrected and some that have been corrected have since resurfaced. These Findings are not confined to any particular department. They are recorded across practically all departments + divisions, including County General, Solid Waste, Schools and Highway Department and others. Remember the REACH issues in 2011? Some of the same Findings have reoccurred and were reported in the 2015 and 2016 Audit Reports.

We already know that we will be hit with another preventable Finding this year.

The county's General Fund balance was depleted from $1.34 million in 2009 to around $150.000 in 2015. That is less than two weeks of payroll. No one has been held accountable.

It was discovered that a fund containing over $1 million was not being reported to the county commission during budget hearings. That has since been corrected.

In 2016, an adjustment was made to, arbitrarily, pull several thousand dollars from one fund and put into another fund to appease an official, creating an unbalanced fund prior to sending to the Comptroller for approval. That, apparently, is the main cause that put our throats under the heel of the Comptroller's office this past year. Why did we use this practice that is strictly forbidden in the private sector?

Well, we have, in this county, allowed expenses to exceed revenue for 9 of the last 12 years. This practice has become a habit. And, the Comptroller's office had had enough.

Some proposals that have been requested by the County Commission to compare activities, processes and operational costs with other providers of selected services have been met with refusals.

Lack of attendance of newly elected officials and employees at seminars and training classes provided by various institutions and organizations that would benefit in our work processes and decision making. Most of these classes are free of charge. Knowledge is valuable.

The lack of situational urgency when problems arise and non-actions to issues occurring in daily activities.

Neglect of providing needs and resources to some departments, while favoring others.

Over the last 2 years, we have increased property taxes 22 cents. That has brought in an additional $440,000. A few weeks ago in a Budget meeting I asked "what had the taxpayers received for this additional money". I didn't get a timely answer. Later, after giving it thought, I was told that we had bought a new ambulance. We know where most of it went... 70% of our General Fund budget goes directly to employee salaries and payroll benefits. 70%. We know that in addition to salaries we pay an overall minimum average of $14,500 annually in tax-paid benefits to each employee. We also know that our county pays, dollar for dollar, more in benefits to our employees than any other comparable county. Why?

I hear many say "we can't afford Centralized Financing". "We simply can not afford it". Really?

On past Thursday evening the Budget Committee approved the 2017-18 operating budget that will be presented to the full commission on the 15th of this month. That budget includes $311,551 in additional spending above what is projected to be spent just this past year. (That is a 6.5% increase in one year!)

In addition to that, it was approved to propose an increase in property taxes of $1.44 (for a total of $4.19) for one year. That will bring in an additional $293,000 in the coming year. Will we use the same system to manage that money as we have in the past? If we don't fix our finance problem, what good will that measure do us when that money runs out? (There is estimated to be $850,000 in property tax next year. How many finance systems can we implement with that amount??)

I summed up the amount in the upcoming 2017-18 budget proposal we are to pay for insurance and protective services to protect our employees, buildings, inmates and vehicles. $919,737. How much do we invest in protecting our finances? $0.00

The problems we face are not with the good people we have making finance + purchasing decisions.... It's the process and lack of organization we choose to use! That is what needs to be changed.

Who will ensure that our money will be controlled and not continue to be spent unnecessarily? Are we willing to risk using the same process or system that has brought us to this point? The same system that has given us those created issues just heard? What about the hidden issues that haven't yet been discovered? Or, are we going to use the knowledge we have of the past and make a responsible decision to let a professional Finance Director manage this money for us and hold them accountable.

No person in a leadership position has been held accountable for the issues mentioned above.

I have had various officials to tell me they were against Centralized Financing. I can understand that. No one wants their spending habits changed. Particularly in government. Does that make it the most efficient way? After a career in the private sector, I can attest that it is NOT the most efficient way. But, it is the government way. Centralized Financing will not tell you how to spend the money. The commission will continue to do that. Centralized Financing will ensure that what is being spent is authorized, efficient, and spent for what it was intended. The money is accounted for.

Allow me to put it this way.... Cannon County, overall, has a $23 to 24 million budget. If any of you owned a business with that budget would you want relatively inexperienced people coming in (possibly) every 4 years to handle your financials and purchasing, with most departments without job descriptions to guide them, OR would you prefer to have a Finance Director who has certifiable knowledge and experience, hopefully with a good track record, that could stabilize the possible turnover and be held accountable for everything with a decimal in it? This person would answer to a committee, comprised from the major departments, to oversee the activities and could continually guide the direction which would be best for the county.

Centralized Financing is only a tool; a financial processing tool to aid in the control of accounting, finance and purchasing processes. Once you acquire this tool it should be put in the hands of a qualified professional that knows how to use it. And it will aid newly-elected officials that have little or no experience with government operations. Only then will we get the maximum results that we all deserve. I believe we will see a rewarding return on our investment.
CTAS has made themselves available to assist and guide us through the process of implementation should this be the desire of the commission.

If we fail to adequately address and solve this ongoing issue, it is NOT because we don't know what to do but, because we don't do what we know to do.
The Commission has been given considerable information, including the Audit Committee Report on Centralized Financing, a variety of contact information of officials in other counties and we have had Steve Reeder, a State Auditing Manager, to speak with us and answer our questions. I am confident that we have the information and knowledge to make the right decision on this subject.

I have the utmost respect and confidence in my fellow and lady commissioners to help bridle and control the taxpayers' hard-earned money they have entrusted to us. I ask that you search your heart and search your souls and perform as we are expected... make the hard decisions, the correct decision and not continue to 'kick this can down the road.' If you don't believe that centralization is the right tool we need to correct our failing finance processes, I am asking that you formally recommend your choice of method to correct our financial distress.

Thank You for allowing me to speak.