Most local governments in Wisconsin were created over fifty years ago. They started with a few basic departments and then added to them as new government services were mandated or passed down from the federal or state government. Financial systems were basic at first, and governments added to them as the need arose. In many cases, separate government departments created financial systems to perform billings, collections, and other necessary functions, such as accounting for preparation of grant claims for reimbursement.
Although this method of financial operation worked fairly well in the early days, with the advent of automated financial systems and the automatic transfer of information, individual financial systems and processes have become inefficient. Many of the individual department systems result in duplication of effort because the same financial information needs to also be recorded in the general financial records. Overall, under existing procedures, more effort and personnel time is needed to accomplish recordkeeping.
Wisconsin state statutes create an overall framework for the financial operations of counties, cities and villages. These provisions provide basic internal accounting controls largely by defining how local governments should authorize spending and separate financial duties among various officials. Although the statutes provide a general financial framework, they do not specifically describe how the various financial functions of receipting, invoicing, purchasing, disbursing and payroll should be handled. In addition, other state laws set forth specific services that local governments must provide. In most instances, they do not require a specific organizational structure or specific local department to provide these services. As a result, flexibility in establishing financial systems is allowed and, in our opinion, can result in significant savings for local governments.
Local governments are finding efficiencies through centralization and automation
Because of the ability to do things more efficiently with automation, many local governments are conducting a review of their financial systems and, in some cases, their entire department structure. The goal of the reviews is to determine if the local unit of government can operate at lower costs or gain other benefits from a re-engineering of financial systems. Also, because of the potential for lower administrative costs, local governments have also reviewed how they deliver services to constituents with the expectation that re-engineering can provide more efficient and effective services.
Specific changes that many local governments have considered during a re-engineering of their operations include the following:
- Creating a centralized finance department: Centralizing authority for establishment of financial systems and procedures of all operations, including those completed by departments.
- Enhancing technology: Adding additional hardware and software to speed up and enhance information flow to achieve cost savings and other benefits.
- Eliminating separate department recordkeeping: Reducing overall recordkeeping effort by combining department recordkeeping needs with the general financial system.
- Consolidating departments: Combining of departments to reduce overhead, supervision and administrative costs.
- Restructuring governing committees: Reducing the number of governing committees to avoid overlap of duties and duplication of effort in adopting policies and procedures.
- Identifying and quantifying government services and funding priorities: Categorizing services as essential, nonessential and optional and determining level of service desired to be funded.
- Revising hiring and other personnel policies: Replacing full-time employees with part-time or seasonal employees and reducing overtime and regular hours. Changing employee benefit levels provided to reduce costs.
- Reviewing for shared service opportunities: Assessing the feasibility of developing collaboration efforts with other local units of government and other entities for service delivery with the potential for cost savings.
Most local units of government are not able to implement all of the above changes, but many have identified some cost savings or efficiency ideas that they believe will work for them. Sometimes changes cannot be made immediately, but can be delayed or phased in over a number of years.
Contact us to discuss the possibilities for your government.
Mike Konecny, CPA, is the managing shareholder for services provided to Schenck’s government and not-for-profit clients. With over 30 years of experience, he has managed auditing and consulting engagements on numerous government clients, including county, city, village, school districts, and special districts.