FY2014 General Fund Budget: $30.87 million
FY2015 General Fund Budget: $35.22 million

Does this reflect $4 million in revenue growth for City of DeKalb? No, it does not. For one thing, FY2015 currently shows a deficit of $586,800. It is not a balanced budget (at least not yet, though they may not be done with it).

Also, more than $2 million of the shown increase is a result of the city manager’s effort to record more revenues and expenditures in the actual budget.

Let that statement sink in for a min.

And we are not just talking about bringing the Administrative Tow account into the budget picture.

[T]he Home Rule and State Sales Taxes are being revised to show the gross sales tax revenue. In previous years, the sales taxes were shown as a ‘net’ income, after deduction of sales tax abatements with DeKalb County and the City of Sycamore.

The result of the change is that, for the first time, we can look at sales tax revenues and it’s the real number. And for the first time, we can look at expenditures and find out that tax-sharing agreements are expected to cost us about $2.1 million next fiscal year.

It’s another reason to feel pretty good about how the budgeting process is going under new city management.

An alert reader tipped me off that the DeKalb Public Library added about $10.5 million to its fund balance last year (see FY2013 column, bottom line; click & magnify to see it bigger).

FY2015 Library Budget 2of2 photo LibraryBudget2of2_zpsc6c1348a.jpg

Nice, huh? Wherever did it come from? Let’s check the revenues.

 photo LibraryBudget1of2_zps3855ef75.jpg

Hmmm. Not here, either — and we still have to account for $8.5 million and change.

Doesn’t seem like just a typo or simple arithmetic error. Probably bond proceeds or the state construction grant came in and somebody neglected to add it to the appropriate line item.

Whatever the answer is, it seems a pretty large mistake to slip by to this stage. Just sayin’.

Meet the New Boss

Behold the new organizational chart of the City of DeKalb.

New Organizational Chart FY15 photo neworganizationalchart_zps0d8ce6a1.jpg

It’s part of the draft budget for FY2015.

Recommended reading: the city manager’s 14-page Transmittal Letter to the council, which begins on page 8 of the PDF file. Spend some time with it and see if you don’t feel like you’re finally in the loop. And that the city truly is under new management.

From the Daily Chronicle today comes “DeKalb aldermen confront budgeting issues.”

During their Monday discussion of the budget for the fiscal year that starts July 1, DeKalb aldermen were told the city will need to cut services or boost revenue in order to maintain operations in the coming years.

Beginning July 1, alderman were told, the city should shift its structure and look at the way the general fund is used.

“The main thing is the current structure of how everything is put together is not sustainable,” City Manager Anne Marie Gaura said. “Something has to change and that will require policy decisions in the coming months and coming years on how to address this long-term.”

Gee, where have I heard this before? Read the rest of this entry

City of DeKalb’s use of administrative tow fees brings up lots of questions, such as how many of these off-budget accounts the city has and whether their collective use rises to the title of “shadow budget.”

I don’t have the answers to the above questions, but I do know that even off-budget transactions are included in the invoice payment listings, aka check register. And thanks to the new account coding, you can usually easily tell what type of account each purchase is charged to, should this be of interest to you. Read the rest of this entry

The Daily Chronicle may have just published one of the most important investigative reports ever written about City of DeKalb finances.

Since early 2013, the DeKalb Police Department has used around $300,000 of the $350,000 collected in administrative tow fees to buy a wide range of items outside of its regular budget.

There are a lot of potential issues arising from this revelation, from whether the tow fee ordinance is fair to how much the equipping of the new police station might have gone over budget. The article seems to suggest that, right now, the city is mostly concerned about the administrative tow ordinance itself coming under attack. But to me, we’re taking our eyes off the prize if we stray too far from the simple fact that $300,000 in public spending was not publicly accounted for in 2013.

I mean, doesn’t it make you wonder:

  • What other accounts holding fines and fees are used for “extras”?
  • How this might relate to the $3-million-plus “excess expenditures over budget” that the city’s auditors found noteworthy?

  • Why the city has begun changing the policy even while insisting there’s nothing wrong with the status quo?
  • That’s just for starters. So I’m going to keep my eyeballs on this for awhile, yes, yes indeedy.

    **Update, noonish: Just picked this up on Twitter: IL Rep. Tom Demmer (R-Dixon) is sponsoring legislation to help prevent thefts of local government funds. One of the key provisions includes auditors’ sharing copies of the management letters with the governing bodies of counties and municipalities.**

    Recently I became aware that each annual financial audit includes an auditor’s “letter to management” with comments and recommendations. As far as I know, such letters are not published (perhaps due to inclusion of deficiencies that some would find embarrassing) but a citizen can obtain them via Freedom of Information Act requests and I did.

    This piece of the FY2013 letter caught my attention:

     photo AuditorsLettersOverBudget_zps70d364e4.jpg

    “Excess of actual expenditures over budget” to the tune of $3.1 million is pretty major, especially for a town that supposedly is striving to meet a target to hold the equivalent of 25% of its General Fund balance in reserve.

    Why isn’t the overspending big news? When it comes to the General Fund, the city enjoyed revenues that exceeded projections for the year — enough to cover the excess spending and a bit more. I guess the philosophy is, if you don’t end up with an actual deficit in your GF, it doesn’t matter what you spend.

    Other funds, such as Equipment and Fleet, aren’t so easy to explain. For example, Equipment had excess expenditures of $512,680 according to the letter, yet total expenditures as shown in FY2013 estimates (which are part of the FY2014 budget) are only $259,310. Fleet has a similar story. Did someone OK last-minute spending sprees that didn’t make it into the FY2013 budget estimates? What should we make of this?

    Now We’re Getting Somewhere

    Turns out, City of DeKalb’s press release this week about hiring outside help has a backstory, and the Daily Chronicle has unearthed it..

    New DeKalb City Manager Anne Marie Gaura wants the city to hire an outside financial expert after staff recently broke rules for making purchases in excess of $20,000.

    First, the council approved the changes to city hall that included moving the finance office to the first floor and upgrading security. When city staff sought council approval, $14,000 in work had been completed, but the project was slated to cost $36,000. During their last meeting, aldermen approved a $22,864 expenditure for fitness equipment at the police station that had already been purchased using administrative tow funds.

    “This just goes to the long history of the organization,” Gaura said. “It wasn’t anything intentional, but it indicated to me we need to improve our purchasing policies.”

    Wow, dig it. The new city manager is saying it’s not OK to come to council for authorization to exceed the $20,000 spending authority after the fact. Think about what that might mean for fiscal discipline and accountability in DeKalb if the city manager is a stickler for the rules.

    First, let’s update our pension percentage-funded chart with the FY2013 numbers. These are from Comprehensive Annual Financial Reports (CAFRs).


    City of DeKalb is quick to tout its balanced budgets and its growing “reserves.” But if DeKalb is doing so well, why isn’t it making up the pension-funding ground it lost during the past two recessions? Read the rest of this entry

    From a Northern Star article this week:

    City manager Anne Marie Gaura said the finance committee typically reviews the budget and looks at policy recommendations and general fund balance.

    “The goal is to utilize the finance advisory committee in the most effective means of how to benefit the budget and the community,” Gaura said. “It’s an incredibly talented group, and we want to make sure we’re utilizing their talents to the maximum.”

    If we REALLY want to utilize the talents of the city’s Financial Advisory Committee (FAC) to the max, we need to move it past budgets. Read the rest of this entry