Board eyes model of finance trends
Formulas could help plan county’s future
The Yuma County Board of Supervisors got its first look Monday at the 10-year computer model being built to help the county anticipate future financial trends as they work on their budgets for the upcoming decade.
Robert Leland, senior advisor at Management Partners, said the formulas behind these models anticipate future needs of a government or local business and put them up against the likely fiscal challenges ahead.
“In terms of fiscal discipline, forecasting is important. Those of us in government tend to be optimists and therefore there is a tendency towards wishful thinking about the capacity of revenue growth to solve all our problems. And so, the discipline of the model makes you realize there are certain constraints to that,” he said.
For instance, another recession is all but guaranteed to happen in the next 10 years based on the long-term economic cycle, he said; what’s unknown is when and how bad it will be. For the time being, he’s plugged one into the model for during 2019, and said it’s expected to be of “moderate” severity.
“It gives you early warning – by looking ahead of the game, you can see adverse trends coming up – and gives staff time to work out timely and prudent solutions without being under the gun,” he said.
The fiscal model does have flexibility to address new realities as their ramifications become clearer, Leland said.
“It’s a living document, the numbers are always changing and updating; it’s not just a one-off document.
The county has been trying to implement a longterm fiscal plan for a few years, ever since former Administrator Robert Pickels brought it back from a government executive management course he took at Harvard. Management Partners, which has done such models for other government agencies, was recently selected by current Administrator Susan Thorpe and other top leaders.
The goal is to anticipate big drops or increases in revenue and making the changes necessary before the money dries up, creating a more stable budget cycle.
“We create a baseline budget, current service levels before budget corrections, and we’ll tell you the situations you’re up against.”
Ninety-nine different revenue funds within the county budget can be tracked through the model, he said. “It’s very visual, it has a dashboard, numerous charts that change immediately as you change the assumptions.”
But it won’t replace the yearly budget plan the county has to assemble and approve before the start of every fiscal year July 1.
“It is not a replacement for the annual budget. The forecast doesn’t set priorities. It comes up with the main drivers for revenues and expenses, it comes up with the kind of resources you can expect, but it’s your annual budget process where you set priorities and get really detailed with programs,” he said.
Leland said the county officials will have to make their own decisions about things like the ability of its staffing levels to provide county services. Before the effects of the Great Recession really began to be felt, Yuma County averaged 7.4 employees per 1,000 residents at that point.
“It began to impinge on the county’s ability to add new staff, so for several years the staff has been flat or slightly down, down by about 35 (full-time equivalents). But the county’s continuing to grow, and staffing as a function of population has declined since then. We’re dropping now to about 6.8 for 2017, and if that were held steady through the forecast period, that would go down to 6 per thousand. That will clearly limit the county’s ability to serve a growing population’s demands.”
But adding employees, besides boosting salary costs, also adds to the county’s pension liabilities.
“Pensions are a big deal nationwide, no less so in Arizona,” Leland said.
Leland went over the projected trends for several other issues affecting the county expenses in the future, including capital projects needs and health insurance costs, while noting that many things are becoming more unpredictable as the Trump administration gets ready to take over at the federal level.
He also looked at fluctuations in the six sources the county depends on most of its money for: property tax, state-shared revenue, sales tax, auto-in-lieu, federal Payments in Lieu of Taxes, and indirect costs.
The supervisors seemed generally impressed by the model. District 2 Supervisor Russell McCloud joked, “If you put a higher sales tax number in there, do the dollars just automatically start rolling in?”
Leland answered, “You are, like most agencies, largely at the mercy of forces beyond your control, and the things you can control, that’s what you’ve got to work on. And (you can) see where the trends are going, so if there are tough decisions made, you don’t put yourself right up against the wall to make them, you plan them in advance.” Also Monday the board: • Approved the purchase of one 2017 Ford F-550 Supercab 40-foot bucket truck for $124,187 through the statewide purchasing contract.
• Discussed a proposed zoning code amendment about simplifying submittal requirements for building permit applications, giving staff the go-ahead to start the formal process of changing the code.
• Decided not to approve a one-year professional services agreement with Interim Public Management for the current fiscal year. The firm is already providing an interim manager for the county’s General Services department, and this would have expanded its use for filling in other vacant management positions.
Yuma Sun staff writer Blake Herzog can be reached at (928) 539-6856 or bherzog@yumasun.com.