MANAGEMENT and GOVERNMENT

MANAGEMENT and GOVERNMENT
Basic Financial Management Techniques Are Ignored At All Levels Of Government

Part 4 on July 25, 2010

TWENTY MILLION DOLLARS! What would happen to you if your error or oversight caused a $20,000,000 loss to your employer? Some weeks ago the big news was about a little girl who had apparently fallen through the State Child Protective Service crack with the result that she had been imprisoned and abused for multiple years. The State, when sued on the little girl's behalf, opted to
settle out of court with twenty million dollars of taxpayers' money.

The employees you elected to represent your interests in government have spent us into huge deficits. Recession is their favorite bad guy, and the reaction is massive, but very selective, budget cutting

I am opinionated that children are our country's most important asset. I am Sir Tunnelvision in this regard, so my least favorite spending cuts are about our children. Two outrageous examples come to mind: while schools are cutting teachers and programs [even closing schools] I have noticed where thousands of dollars are being spent on school driveway, sidewalk and parking area replacement at four nearby campuses. I see one neighborhood park where there is no water in the swimming pool, and the pool in my neighborhood park is open only because the community generously answered the call.

Just about any "public servant" [yes, it seems naïve in today's world, but there was a time when elected employees were referred to in just that way] who cares can pick up on financial management fundamentals. One of the most obvious fundamentals is that recessions are products of a totally predictable economic cycle that has been in place for many years. There was readily available writing about the recently passed boom and the present recession before the boom even started. Anyone who can understand a basic line chart can witness the cycle by looking at a 25 year stock record. My favorite is stock symbol SPY which charts the Standard and Poors 500 stocks.

Financial confusion is caused by spenders who don't know or don't care about the cycle. California, for example, has two "employees" '" the Controller and the Treasurer '" who should be and probably are quite familiar with the cyclical nature of things financial. I have never heard anything about budgeting, spending or saving from either official. They just seem to keep doling out money until it is all gone.

There are and always will be certain events and experiences including the boom and bust elements of economic cycles that cannot be avoided, but that awareness can be the call to preparedness like the financial planning that probably exists in your home or business '" especially if your income is seasonal. There is no mystery in preparing for the bust by putting money aside during the boom.

The California State capitol building, constructed between 1861 and 1874, was old enough to look pretty tacky and thusly prompted a multi million dollar renovation. The building looks great now, but passing by always makes me think about how the job could have been scheduled during the recession when it would provide a lift for contractors and workers instead of during the boom when everybody was busy and prices were topped out.

The cure for government budget disasters lies in financial awareness, planning and discipline. Controllers, Treasurers and the like need to be held responsible for financial predictions and be legally equipped to call the shots on spending levels for legislative and executive branches to allocate. I would like to see a poll wherein taxpayers express spending priorities to their elected employees and hold said employees responsible for carrying them out.

Sir Oldman on July 25, 2010