New state legislation would streamline county finance system

Gary B. Gray • Feb 6, 2013 at 9:40 PM

Washington County Mayor Dan Eldridge wants in on coming state legislation known as the County Financial Management System Act of 2013, which would streamline various functions, mandate a drop-dead budget deadline and provide provisions that could hasten financial agreements between the county’s school system and its county mayor.

The county currently subscribes to a financial management plan adopted by the General Assembly in 1957.

If and when legislators update this system, the county — after two-thirds approval by commissioners — can centralize its accounting, budgeting, purchasing, payroll, and debt, cash and grant management into a newly created finance department.

“This would be the first real effort at modernizing local government financing in many years,” Eldridge said. “I can tell you it’s definitely going to benefit us, if the County Commission accepts it.”

Just because state law would allow Washington County to completely centralize its financing operations does not mean commissioners will be so inclined. Suffice it to say, this could shake things up a bit.

“It mandates a Sept. 15 deadline for the county to have its budget approved,” he said. “Our deadline has been Oct. 1 — roughly. Legally, if we go past that, the (state) Department of Education, at its discretion, can withhold school funds. I see this as a prescribed remedy for the County Commission and Board of Education to agree on a school budget. Call it a statutory remedy. More than anything, it draws a line in the sand. So it really creates an impetus for commissioners and school board members to work together.”

Implementing the new plan also would mean the new finance department would be responsible for following federal regulations imposed by the Office of Management and Budget Securities and Exchange Commission. You may recall that the county, after studying IRS regulations, decided to fund new school buses this year by issuing tax-exempt bonds to the tune of $1.8 million.

Today, Washington County is officially recognized as “partially centralized,” joining 22 other counties in this category. There are 26 counties currently centralized, and 42 have no central financial management at all.

Shelby, Davidson, Knox and Hamilton do not apply because they operate under a charter or a metro form of government.

The State Comptroller’s Office heralds centralization and proclaims in a report on its website that fully centralized Tennessee counties have a much better track record when it comes to audit findings and that the growing complexity of managing multimillion dollar government operations is served well by this system.

“We received a draft of this last year, and I think it’s been modified somewhat,” said Commissioner Joe Grandy, who also serves on the commission’s Budget Committee. “I think the concept does have some merit. Everybody has a little skin in the game, including the superintendent of highways and schools, and schools are the biggest part of our budget. I like the fact that the finance director would be someone that could transcend the changes that occur with elected positions.”

Centralization creates a new finance department, finance director position, as well as a seven-member finance committee. It also provides for four optional committees that may be established by the County Commission.

Finance department employees would be transferred from the highway and school department as needed. These would be people already doing financing or budget tasks with these departments.

The new finance committee would consist of seven members: the county mayor or designee; chief highway administrator or designee; director of schools or designee; county trustee; two members elected by County Commission (may be a general officer or a citizen); one member elected by Board of Education (may be a citizen).

A finance director would be appointed by the county mayor, and that appointment must be confirmed by a two-thirds majority approval by county commissioners or dismissed by the same.

The finance director would serve as head of the finance department and implement and direct the operations of the centralized financial system. This person also would maintain records of capital assets and develop a long-range financial management plan for the county, and his or her minimum salary cannot be less than county trustee.

“There will be start-up costs,” Eldridge said. “But there has not been a pencil put to it. The most obvious expense will be the hiring of a finance director, and that person will have a big responsibility. That’s OK, we need that. This places responsibility with one department. What we’re doing here is adopting good business practices. It’s true, we’re streamlining. But it’s also a better way to plan, and there’s just one place to go for the information.”

The new system requires the development of a five-year capital outlay/project plan (county already has begun its first-ever five-year plan this year); a debt issuance plan for capital projects; and a long-term liability plan to address issues such as employee benefits, pensions, infrastructure changes and other issues.

The county would have to file an implementation plan with the State Comptroller’s Office no later than six months after the Act is adopted by the County Commission or citizens in a county election, and full implementation must begin within 2 years.

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