No, the City of San Luis Obispo doesn't have such a plan. And for what it's worth
(other than setting aside reasonable reserves and thinking about preparing a
"one-page" set of principles as discussed below), I don't' recommend that you prepare
one based on "possible" reductions you might take if "x" happens.
Why?
Because this will have one of two outcomes, neither of which has much value, but
carries with them the risk of harmful affects:
o You will put meaningful effort into this every year in identifying contingent
service reduction and lay-off plans, even if there is no crisis looming on the
horizon. In this case, you will needlessly cause a lot of anxiety in your
organization about service cuts/job terminations every year for no reason.
And if things are looking pretty good (like they are for most of us right now), this
will come off as "chicken little" or "crying wolf," and make it harder to deliver a
credible message when the sky really is falling. In short, I think this means a lot
of hard every year that will result in poor morale and suck dry any "organizational
vitality" efforts you may have in the works.
o You won't put a lot of effort into this, and it will simply become a perfunctory
report you prepare and file every year, that looks pretty much (if not exactly) like
the prior year. The problem with this is that when you are faced with a genuine,
significant "fiscal disaster," this "plan" will have no value to you whatsoever.
Why? Because no one is going to have "buy-in" to a plan prepared 8 years ago by
people who aren't here anymore that reflects services and programs you no longer
provide (or provide in a significantly different way). Long story short: people will
only invest in quality staff work when they think it matters. And if an annual update
is viewed as perfunctory (not something that is actually going to be used), no
reasonable manager is going to assign much importance (or resources) to doing a
quality job on this year-in and year-out. There will always be (or should be) more
important, "value-added" things for them to do.
In summary, my experience tells me that it is very hard for organization's to
communicate and accept "bad fiscal news." And while this is necessary to do from
time-to-time, it exacts a big-league toll on public sector organizations when it
happens. For this reason, specific "financial disaster" plans should only be prepared
in response to specific disasters.
So what can you do to "be prepared?"
o As noted above, probably the most important thing you can do is set aside adequate
reserves so that when the "big one" happens (and it will , just like fires, floods and
earthquakes), you can take a reasonable amount of time in crafting a solution that is
tailored to: the size of the problem, your long-term fiscal outlook, your
organizational values, and community priorities at the time you have to make these
decisions. It is difficult (if not impossible) to prepare good, long-term solutions
if you're worried about how to meet payroll next week. Adequate reserves give you the
flexibility to make sure your response is proportional to the threat (which is hard to
do with "hypotheticals").
o And maybe consider stating the "principles" you will follow in responding to
"financial disasters," both immediately and long term. This would be more of a
"values" statement than a specific budget-balancing program or set of "reverse
priorities." It this context, it probably shouldn't be much longer than one page, and
could include things like:
-- Being committed to making changes that make long-term sense, and avoiding the
temptation to make quick fixes.
-- Recognizing that operations compose the largest part of your budget, and staffing
is the largest part of operations. In short, meaningful cost reductions mean regular
staffing reductions.
-- Recognizing that under Proposition 218, almost all immediate "fiscal disaster"
responses will have to come from reserves or the expenditure side of the fiscal
equation; meaningful revenue increases require voter approval, and organizing this
(even if you think you will be successful) takes time.
-- Committing to meaningful and timely reporting of your financial condition, and any
adverse trends or events.
-- Making service cuts based on service priorities, not just what positions are
vacant.
-- Balancing the need to adequately maintain infrastructure with day-to-day service
delivery (ie, capital improvements are not the first things to go). Or maybe not:
perhaps your policy is that service reductions and staffing cuts are the last thing
that you'll do.
o Including employee association representatives in preparing budget-balancing
strategies.
o Identifying "at-risk" positions early in the process so affected employees have an
opportunity to transfer to "safe positions" or find new jobs, rather just giving them
two weeks notice. (Or don't do this: your policy could be to give employees the
shortest possible notice to avoid "walking wounded" morale issues.)
Of course, all of these assume you have the luxury of time to think through a
reasonable plan based on these values, and this can only be provided by having
adequate reserves.
It also assumes that you believe in these values, so avoid including "high-minded"
principles that you probably won't really follow. (If you have a tradition of looking
for and implementing "quick fixes," why would you adopt a "principles" statement
saying that you won't?)
In a time of fiscal stress, many will be closely watching whether you "walk the
talk," and looking for opportunities to find where you aren't. (Which is why I'm not
even sure a "principles" statement is a good idea. Unintended consequences are
prolific in our profession. On the other hand, those of you who know me know I have a
bias towards writing this kind of stuff down, so . . . . )
And most importantly, whatever the "principles" you articulate, this approach
recognizes that the best you can do for "financial disaster" planning is to lay-out a
"values" framework for how you will go about making tough revenue and expenditure
decisions when you are called upon to do so.
But I think it is unrealistic to assume that you can effectively lay-out in advance a
pre-determined "auto-response formula" or "Mikado-like" list of actions you will take
when financial disaster strikes (as it will again some time in the future).
I hope this is helpful. Please call me at 805.781.7125 if you have any questions.
Bill Statler, Director of Finance
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93405
Phone: (805) 781-7125
Fax: (805) 781-7401
Email: [EMAIL PROTECTED]
>>> City of Murrieta <[EMAIL PROTECTED]> 2/16/00 9:46:05 AM >>>
Hi folks - here's an interesting request.
Our council wants to adopt a Financial Disaster Plan in the event we are
seriously impacted by revenues losses (i.e. VLF take-away). The plan would
be reviewed annually and provide Council with guidelines on which
reductions would take effect in which order.
Has anyone adopted such a plan that can be shared? I realize each City is
unique and has varying priorities, but perhaps I can glean bits and pieces
from other cities.
Thanks for your assistance. I'll post any responses I get by Wednesday,
February 23rd.
Teri Ferro, Finance Director
City of Murrieta
26442 Beckman Court
Murrieta, CA 92562
(909) 698-1040 x237
(909) 698-9885 (fax)
[EMAIL PROTECTED]
>>> City of Murrieta <[EMAIL PROTECTED]> 2/16/00 9:46:05 AM >>>
Hi folks - here's an interesting request.
Our council wants to adopt a Financial Disaster Plan in the event we are
seriously impacted by revenues losses (i.e. VLF take-away). The plan would
be reviewed annually and provide Council with guidelines on which
reductions would take effect in which order.
Has anyone adopted such a plan that can be shared? I realize each City is
unique and has varying priorities, but perhaps I can glean bits and pieces
from other cities.
Thanks for your assistance. I'll post any responses I get by Wednesday,
February 23rd.
Teri Ferro, Finance Director
City of Murrieta
26442 Beckman Court
Murrieta, CA 92562
(909) 698-1040 x237
(909) 698-9885 (fax)
[EMAIL PROTECTED]
