In Memory of Karen Utterback
This newsletter is dedicated to the memory of Karen Utterback who regretfully passed away on August 18, 2009. Karen was the editor of Canadian Finance Matters, the GFOA Canadian Newsletter. In addition, Karen was the editor of the GFOA Newsletter and associate editor of the Government Finance Review. Karen began her career at GFOA in 1985 and was a valued colleague for those who had the pleasure to work with her. The Committee on Canadian Issues and GFOA staff express their deepest condolences and will continue to strive to meet the high standards established by Karen as lead editor of Canadian Finance Matters.
Committee on Canadian Issues (CCI) | Highlights
Seattle, Washington ◆ June 27, 2009
Co-chairs Len Brittain and Eric Sawyer welcomed the committee to Seattle for the twenty-second meeting since the committee’s inception in San Francisco in 1998. GFOA president Paul Macklem also visited with the committee to contribute to the early discussions.
Most notably the committee was notified that Len Brittain will be the GFOA’s new president-elect. The president of GFOA approved John Martin to succeed Len Brittain as the co-chair of the CCI.
New Committee Members
The committee is pleased to have the following new members: Carl Bird, Robert Bishop, and Jim Rusnak. Carl Bird is the Director of Corporate Services for the City of Yellowknife. Robert Bishop is the Director of Finance and City Treasurer for the City of St. John’s. Jim Rusnak is the Chief Financial Officer for Metro Vancouver.
Standards Task Force
Diana Lokken and Bruce Fisher, the co-chairs of the Standards Task Force, circulated a report to the committee on the task force’s six month work plan. The task force continued its examination of GFOA’s best practices for their applicability in Canada. The committee approved the ten best practices listed near the bottom of this newsletter. These, along with previously approved best practices, can also be accessed in the Canadian section of GFOA's website, www.gfoa.org. Another major focus of the task force will be the establishment of a strategic plan for developing Canadian specific best practices. In the future, the task force will focus on best practices that directly relate to the top 10 issues facing municipal finance officers that was generated by the CCI.
GFOA staff for the Committee on Governmental Budgeting and Fiscal Policy updated the CCI on the progress in the development of the best practice on the drawbacks of governmental entities using the consumer price index and the possible alternatives. The committee members provided further suggestions to enhance the usefulness of this potential best practice.
Professional Development Task Force
John Martin, the co-chair of the Professional Development Task Force along with fellow co-chair Christina Parkins, distributed an outline on the task force’s recent activities. John Martin discussed with the committee the Canadian speakers presenting at the GFOA annual conference, along with the Canadian specific session and the Canadian Government Networking. The Canadian specific session at the GFOA annual conference was Exploring New Approaches to Generating Local Revenue: A Canadian Initiative. The speakers for the session were committee members Mark Gilbert and Bruce Fisher. The Canadian Government Networking covered the top ten issues facing municipal finance officers in Canada and also educating finance officers. Committee members Len Brittain, Eric Sawyer and Mark Gilbert were discussion leaders for the Canadian Government Networking. The task force will examine increasing the number of Canadian speakers at the GFOA annual conference and will develop a new topic for the Canadian specific session at the next GFOA annual conference in Atlanta.
The committee discussed enhancing the education process for future and current finance officers. The committee members brought forward suggestions and shared current opportunities provided to students in regards to education programs and internships. The committee also discussed additional training opportunities for current government workers. The CCI will examine this further at its next winter meeting in Toronto.
Advocacy & Communications Task Force
Lori Craig and Ed Hankins, the co-chairs of the Advocacy & Communications Task Force, updated the committee on the activities and focus of the task force. The committee was briefed on the significant links with the prominent provincial associations throughout Canada and the key staff contacts to the provincial associations. Dean Screpnek, the Alberta GFOA President, is a recent member of the committee. The task force will continue to enhance the working relationships with the provincial associations.
A major focus of the Advocacy & Communications Task Force is the GFOA’s Canadian Newsletter, the Canadian Finance Matters. The winter issue of the newsletter will include an article by Paul Macklem on his experiences as president of GFOA. Also, the newsletter will include articles on the role of the CFO. The committee acknowledged the efforts of Betty Holsten Boyer who successfully recruited contributors for the articles in GFOA’s Canadian Newsletter. Esther Lee will be the new coordinator for the Canadian Finance Matters.
Kerry Tarasoff will join with Diana Lokken as the co-chairs of the Standards Task Force. Ron Kaufman will be the new co-chair of the Professional Development Task Force and will partner with current co-chair Chris Parkins.
The co-chairs of the CCI, on behalf the committee, presented Ken Rust, the GFOA’s Past President, a letter of gratitude for participating in the Western Canadian GFOA Conference in Victoria.
Acknowledgement of Members
Len Brittain was nominated as the president-elect of GFOA and therefore will no longer serve on the committee. Len Brittain has been an outstanding committee member and a significant contributor to the development of the committee. He has been a member of the Committee on Canadian Issues since 2002. Bruce Fisher has completed his final term and will no longer serve on the CCI. Bruce Fisher has had a major impact in the approval process of best practices as the co-chair of the Standards Task Force. The Committee thanked Len and Bruce for their outstanding contributions to the CCI.
There being no further business before the committee, the meeting was adjourned. The next CCI meeting is scheduled to take place on Friday, January 22 and Saturday, January 23, 2010 in Toronto.
My Half-Year As GFOA President
Is it as interesting, challenging and rewarding as it’s cracked up to be? Absolutely, and a whole lot more. To be handed the GFOA presidency in the same year as another left-handed president was elected is monumental, but only in my mind!
Being the first Canadian president since Jack Pickard in 1992, it is a great honor/honour (having grown up across from Detroit, I’m fully bilingual) to represent my Canadian colleagues as well as the Association. I have had the privilege of attending state conferences in Washington, Florida, North Carolina and Texas; provincial conferences in British Columbia and Ontario (MFOA); and the Institute of Municipal Finance Officers (IMFO) conference in Johannesburg, South Africa.
The professionalism and dedication in every association is strikingly similar, but all have their own traditions and approaches. There have been great dinners, lively dancing and stimulating discussions and presentations that you can really learn from (how many words can you get on a PowerPoint slide anyway?). I’ve toured a baseball stadium, a football stadium and what was once the world’s largest gold mine employing 30,000 workers, and have seen wild animals in their natural habitat. I’ve seen where the ultra-rich live in North America and the tin shacks of Soweto in South Africa. The one constant that I have seen is the pride people have in their countries; in their Cities, Towns, and regions; and in their organizations.
It was a thrill to attend the IMFO conference and come away with an appreciation for the emergence of the ‘new’ South Africa. The conference was likely an ‘all white’ affair a mere 15 years ago. In 2009, I estimate 80% of delegates were people of colour/color (there it is again!). It is a country that reveres Nelson Mandela, whose leadership was unwavering in choosing reconciliation over retribution. While there are many problems still to be resolved, there is now hope for all where there had been none. All races are working together to build the country, with the FIFA 2010 World Cup becoming their rallying point. I hope that my future includes the opportunity to go back to SA to help train those employed by financially strapped local governments. The trail has been blazed previously by people like Mark Gilbert and Penny Bruin.
I have been resolute in focusing my presentations on the topic that the nominating committee believed was relevant for this year of service – development of the emerging generation of public finance leaders. It’s clear that local governments globally must prepare to equip our successors. The question is: can we get there fast enough for our new leaders to be confident in steering a local government finance department in an increasingly complex world? Every one of them needs a mentor. We can help make the difference between ‘excellence’ and ‘good enough’.
I must admit, I haven’t made a lot of progress in forming a deep understanding of GASB, FASB and FAF, although I know what the acronyms stand for. However, it was never an expectation of the GFOA staff that I carry messages targeted to US members, and I’m the first to say that credibility would be compromised were I to feign expertise. I’ll leave that for Len Brittain!
The New Year has more opportunities than I have time for (my real job, although I love it, is quite an impediment at the moment). Meetings in Washington, DC, and Tucson, along with travel to conferences in Israel, California, Pennsylvania, New York State and Alaska will keep me on the move. It’s a sweet deal, and despite the fact that I continue to be baffled as to “why me?”, I will do my very best to continue to represent the GFOA of the United States and Canada membership over the next six months.
The City of Calgary’s Long-Range Financial Planning
Calgary has recently made changes to the position of Chief Financial Officer (CFO) to strengthen strategic leadership, oversight and governance of The City’s financial assets, and support for long-term financial sustainability. The CFO’s role will position the organization to respond to fiscal challenges through enhanced cost management and productivity and to seek new and innovative ways to deliver services to citizens in a financially sustainable manner. Calgary’s recently updated Long Range Financial Plan (LRFP), which is discussed below, speaks directly to these challenges. For The City of Calgary, financial sustainability is based on a set of goals and strategies that include not only the required balancing of funding and expenditures in the long term, but also elements such as effective financial planning, diversity of revenue, adequate contingencies, stakeholder confidence and flexibility that make it possible to adapt to challenging conditions. Our financial goals and strategies are summarized in the following chart:
Financial planning is a cornerstone of financial sustainability, highlighting the financial status and prospects of the organization as well as identifying the resources for implementing services and infrastructure, and strategies to support and sustain financial goals. The basic planning element is the three-year business planning and budgeting process. Calgary’s City Council approved its first multi-year operating business plans and budgets for the years 2006-2008, and has followed up by approving both operating and capital business plans and budgets for 2009-2011. Following initial approval, the plans and budgets are reviewed and adjusted each November based on economic changes and requirements of Council.
After increasing the business planning and budgeting horizon to three years, the City produced a 10-year Long Range Financial Plan (LRFP) in 2007. The LRFP development included broad consultation involving management and financial staff throughout the organization. The final report included:
- 10-year projections of funding and expenditure demand for both operating and capital that highlighted continuing funding gaps
- a projection of the statement of financial position over the 10 years
- tests of the sensitivity of the projections to different population growth and inflation assumptions
- scenarios reflecting the impacts of increases in asset maintenance and municipal property tax rates
- identification of The City’s financial goals along with strategies to improve financial sustainability
The projections were based on assumptions such as the approved, budgeted level of resources applied to each service in the final year of the budget, and forecasts of population growth, inflation by category and individual revenue streams.
Financial planning is not done in isolation, as illustrated in the diagram from the LRFP 2009 Update shown above. The finance function of the organization is a partner in providing services and infrastructure to citizens, and financial goals affect and are affected by the goals of all City departments.
In recent years, The City of Calgary has been improving its planning processes in many areas such as transportation, land use, and asset management as well as finance. To encourage interaction and improve consistency among the plans, representatives of long-term planning projects meet periodically. This has led to an agreement that all projects will use the 10-year capital plan as a common data base. Also, Calgary’s new municipal development plan refers to the LRFP in its growth chapter and emphasizes that financial sustainability must be considered in land use planning.
The LRFP has been updated twice since the original plan was presented to Council. The most recent version (November 2009) includes a section containing significant accomplishments as well as benchmarks that can be used in the future to evaluate progress toward improving long-term financial sustainability. The 2009 update is available through The City of Calgary website, www.calgary.ca (search for “long range financial plan”, choose the first recommended item and follow the links).
Periodically updating the LRFP has served to remind Council, management and staff of the long-term financial challenges faced by the municipality and the need to act on the strategies required to improve long-term financial sustainability.
The Vancouver Services Review
The global recession has forced many organizations to take a tough look at their finances and to re-prioritize their services, spending and financial plans. The City of Vancouver is addressing the pressures of this economic downturn by focusing on a proactive and extensive review of its services—with the goals of continuing to provide innovative and effective service to our public while keeping our financial house in order, and maintaining a reasonable level of taxation.
In late 2008 the City experienced dramatically changing economic conditions. Most significantly, development revenues declined with the City’s 2009 revenue projection down $15.7 million. At the same time, rising fixed costs, including a 4% compensation increase, and new programs coming on line created a projected budget gap of $42 million.
To respond in a short timeframe, City Council approved a series of short-term measures, including project deferrals and an unprecedented hiring freeze, along with a 5.89% tax increase for 2009. Given these measures were short-term, a longer-term strategy was needed. In February 2009, Council directed the City Manager to review the City’s businesses, service delivery practices and general operations in order to mitigate future burdens on residential and business taxpayers.
The Vancouver Services Review (VSR) project team was established to address Council’s direction and involved over 30 city staff from all Departments and Agencies, including Police, Fire, Library and Parks. Working with external consultants over a short and intensive period from June to September of 2009, the team completed a review of core services and developed recommendations for implementation of shared services and business transformation. At its core, the project was an enabler of transformational change at the City. The VSR team guided the City through a comprehensive corporate priority-setting and improvement program that accomplished two key goals:
- It focused the Corporate Management Team’s (CMT’s) discussion of service priorities—‘WHAT’ we do.
- It identified opportunities for changing the way that services are delivered—‘HOW’ we do it.
“WHAT WE DO”—The Core Service Review
One of the important results of the VSR project came from the core service review methodology which required the organization to prioritize services across all departments.
Each manager was asked to review their area’s services and then to rank services according to their alignment with public need and interest under the following themes:
- Basic needs that are essential to the City’s functioning,
- Real needs that the are services the public requires, and finally
- Elective or added value services that, while not essential or part of the core mandate for City services, are valued by citizens and businesses.
Services included both existing and proposed new services. Each department ranked their services in order of priority based on a continuum of basic requirement, real need, and elective/added value. Subsequently, the Corporate Management Team ranked all services collectively to describe a Corporate continuum.
“HOW WE DO IT”—Business Transformation
The VSR team received and reviewed over 1000 suggestions (844 unique ideas) from employees across the organization and incorporated the best ideas for business transformation into a small number of priority projects. (The opportunity log is on the City of Vancouver website.) The remaining ideas have been saved as a rich resource for future process improvements and efficiency opportunities.
By September, the VSR team had developed business cases for 20 of the transformational opportunities, 15 of which were approved by the Corporate Management Team for implementation.
Recommendations include implementing a shared service model that will cut across all agencies and departments of the City in the following areas:
- Supply Chain
- Facilities Management
The benefits of shared services include creating economies of scale, finding synergies leading to reduced costs and redundancies, and focusing on improving accountability while being aware of and respectful of each business unit’s needs.
Other Projects will implement leading practices across all Departments and Agencies in the following areas:
- Capital Planning and Budgeting
- Attendance Management Processes
- Pay Notice Payroll Processes
- Service Rationalization: Phase 1 - Garbage Collection
- Permits and Licensing
Estimated annual savings of $10 million in 2010 and up to $28 million by 2012 are expected from all these initiatives.
The 2010 annual budget plan identified $60M cost pressure (equivalent to an 11.2% tax increase), of which the largest component was a further 4% compensation increase. In working to address this gap, the VSR process guided a number of decisions:
- The efficiencies identified from the 15 businesses cases were used to reduce the Operating Budget by $10 million
- The Corporate Prioritization exercise provided a tool to identify what services needed to be adjusted (both increased or decreased) to align with a balanced budget and a minimal property tax increase set by Council.
In the end the Budget was balanced with a 2.2% tax increase. This could not have been achieved without the VSR.
The VSR project has moved into its implementation phase with the establishment of a Program Management Office with full-time Project Management, Finance, Change Management and Communications expertise to support the changes that will occur throughout the organization. The Corporate Management Team continues as the Steering Committee for the VSR program focused on implementing the initial opportunities as well as other suggestions from the opportunity log.
The Vancouver Service Review is transformative for the City. It allows clearer focus on the priorities of the organization across all departments and provides better and more effective services to our public. Ultimately the VSR will be a catalyst to improve the best practices of our current organization while creating a more nimble, creative and fiscally responsible organization to serve the citizens of Vancouver.