MONEY

On May 5, the city of Killeen will put up two City Charter amendments for voter approval that proponents argue would streamline the city’s ability to manage its annual budget.

But one of those amendments — what will become Proposition 1 on the ballot — hit a roadblock Tuesday when three members of the council voted against calling the charter election due to the amendment’s wording.

They said letting city staff transfer money could open the door for the manipulation of finances by a future city manager and department heads.

A management audit of the city’s finances completed in August showed past city managements had a lack of financial controls that caused the improper transfer of money between bond accounts and the general fund and a lack of long-term planning, among other concerns.

What seems from the outside like a routine administrative change is part of an ongoing battle between three council members who do not want to defer financial authority to the city administration and four more who want to “let the city manager do his job,” as Councilman Juan Rivera put it Tuesday.

The city so far has expended no resources into educating the public on the purpose and effect of its two proposed amendments, but with three of seven council members likely to publicly oppose the first amendment, time is running out for the city to convince voters.

Here’s what we know about the controversial amendment that split the council and how it affects city taxpayers.

The amendment

The first proposed amendment would alter the language in Section 71 of the City Charter, which governs final approval authority of financial transfers during a given fiscal year.

There are three forms of transfers that city administrators can make, depending on the construction of the city apparatus: interfund, interdepartmental and intradepartmental. The city financial administration is arranged like spokes on a wheel with specific funds largely kept apart from one another and governed by a municipal budget, or spending plan, passed each September.

Under the current charter language, the council maintains final approval authority for interfund and interdepartmental transfers while the city manager has final authority over the transfer of intradepartmental, or “line-item,” appropriations. This was approved as part of a 33-part charter amendment election in 2013.

In practice, City Manager Ron Olson brings “mid-year budget amendments” to the council that predict where the city needs to shift money as the budget progresses. The last time this happened — May 23 — the council approved $609,531 in interdepartmental transfers in the general fund, mostly for unexpected personnel expenditures.

The new amendment would allow the city manager to execute transfers between departments that previously had to wait on council approval. The council would maintain final approval of interfund transfers — which shuttle money between accounts like the general and solid waste funds.

The last time a significant interfund transfer occurred was in December 2016, when the council approved a $1.67 million transfer of unallocated reserve funds from solid waste to the general fund. The move, proposed by then-interim City Manager Dennis Baldwin, was undertaken to bump up the general fund’s reserves to avoid a credit downrating.

A critic of the move said it “was like shifting deck chairs on the Titanic.”

The council also annually approves “indirect cost allocations” in budgets, in which specific funds “pay back” services from another fund. For instance, if the city’s accounting department ran books for solid waste, the solid waste fund would “pay back” the general fund for that service. Those interfund transfers are effectively approved by the council when the budget is adopted in September.

The amendment would additionally give final line-item transfer authority to Director of Finance Jonathan Locke. Line-item appropriations, which denote specific expenditures within a department, are rarely reviewed by the council, even during the budget approval process.

Council concerns

Olson argues the first amendment would:

1) Make it easier for city staff to manage the budget in real time.

2) Help include department heads in the budget management process.

3) Unclutter City Council meetings with periodic budget amendments.

Olson said the council would still hold quarterly reviews of the budget’s progression, which are released to the public through monthly financial reports and Comprehensive Annual Finance Reports, or CAFRs, available online.

The loudest dissenter has been Councilman Gregory Johnson, who said Tuesday he did not want to forfeit “checks and balances” on city manager and department head authority.

Johnson and Rivera, in an unusual lapse of protocol, had a stare-down over the issue Tuesday after Johnson said he was being accused of trying to micromanage the city’s finances. Johnson said his only concern was effective oversight.

In an email Wednesday, Johnson said the charter election would be a talking point throughout election season, and he would not back down from publicly opposing it.

“This is a big issue and will be brought up at every political forum,” he said. “I refused to allow our city to take steps backwards. No single individual within our city government should have that kind of unchecked power.”

Johnson, whose at-large seat is up for election May 5, filed for re-election Friday.

Rivera, who has also filed for re-election, said Tuesday the city manager’s role is to effectively manage the budget and said the council should avoid tying Olson’s hands.

“We the City Council are not managers — but we get an opportunity to make sure we approve the budget,” he said.

Council members Shirley Fleming and Steve Harris, who joined Johnson in voting against the amendment election, said the move could eventually move the city back into financial trouble by taking control out of council’s hands.

“It’s because we’re given that free reign to former city managers that we are where we are now,” Harris said Tuesday. “It’s one of those things where if it’s not broken, don’t fix it.”

Former city officials had been blamed for failing to give council members sufficient financial information when presenting decisions to them, leading to uninformed oversight and a run of deficit budgeting and reserve fund drawdowns.

Fleming said she thought the issue had nothing to do with Olson’s leadership, but the possibility of malfeasance in the future.

“I trust Mr. Olson. It’s not about Mr. Olson, it’s about the position,” she said Thursday. “I feel like this is taking the power away from the council by even suggesting that we give the city manager that much power.”

Worst-case scenario

A worst-case scenario for the type of authority granted under the amendment goes like this:

If an approved annual budget sliced away hundreds of thousands of dollars in police overtime by council direction, a city manager could arrange to shift funds toward that overtime budget while taking funds out of vital functions in other departments without any council approval.

In that scenario, the city manager and at least two department heads would have to be on board with the transfer and would have to avoid council notice during its quarterly budget reviews.

In a Facebook post Thursday, Johnson said the amendment would “allow the city manager to transfer millions of dollars between accounts without authorization of or notification to the governing body.”

That would only be true if the city administration could successfully hide the transfer of millions that the majority of council did not agree with. The council also has unilateral authority to hire and fire city managers, according to the charter, so the type of brazen shifting of money Johnson feared does have some level of accountability.

The council passed an unprecedented financial policy package in December that aimed to control the kind of short-term, unchecked decision making that hamstrung previous administrations. The policy, among other things, gives the council annual review of how the city manages its money and formalizes Olson’s approach to budget creation.

For the average taxpayer, the amendment would not alter property tax rates or service fees — but it does ask for a level of trust in the city administration that remains damaged after the budget crisis of 2016.

That’s when the public learned the city was some $8 million short of a proposed budget and had been overspending for years.

Olson, who has spent his first year in office working to right the ship and brought the first balanced budget to the council in years, said the amendment would make it easier for him to do his job and represented a drastic shift from the city’s past practices.

“The system we have right now apparently didn’t work,” Olson said Tuesday. “This system we have right now won’t solve those problems.”

Auditors, however, did not criticize a system that gave the council oversight; they faulted previous city management for failing to give council members the financial information to exercise oversight.

Second amendment

The other amendment that will go before voters in May has been seldom discussed and presents a more clear-cut budgeting change.

The amendment would alter the language of Section 73 of the charter, which governs the “lapse” of capital improvement project appropriations.

Under current charter language, a multiyear capital improvement project — such as multi-phase road construction — must “lapse” at the end of each fiscal year and then be re-budgeted the next fiscal year.

In practice, the city votes on a “carry over” ordinance each year that rebudgets the remaining costs of a capital improvement project into the next year budget. With the amendment, capital improvement projects would automatically be budgeted over multiple years, ending the “carry over” measures.

The two amendments will be placed on the May 5 municipal ballot.

For more information leading up to the election, go to kdhnews.com/centerforpolitics.

kyleb@kdhnews.com | 254-501-7567

(1) comment

Alvin

This is the personal opinion of this writer.
Copy: 'But one of those amendments — what will become Proposition 1 on the ballot — hit a roadblock Tuesday when three members of the council voted against calling the charter election due to the amendment’s wording.' End of copy.
This is exactly right to say that these 3 members of the city council were in fact against the ineptitude of this amendment and all of it's ramifications. I commend these 3 council persons in calling out just what is being done to this city council.
Copy: 'They said letting city staff transfer money could open the door for the manipulation of finances by a future city manager and department heads.' End of copy.
Again, I agree with the provision of allowing the city manager, the finance manager and various and certain department heads to broaden any avenues that will tend to exercise a continuance of their powers will broaden the powers that has since constituted a in the past 'a broken system' and should endeavor to contain this waste.
Copy: 'A management audit of the city’s finances completed in August showed past city managements had a lack of financial controls that caused the improper transfer of money between bond accounts and the general fund and a lack of long-term planning, among other concerns.' End of copy.
And I agree with this assessment, that the charter language that was generated in 2013 was inferential to the general breakdown of the civic structures. This general breakdown and/or loss was of consequence in a general fund depletion that could only be characterized as a fortuitous example of what takes place when 'nobody has cause of running the ship'. And as a result, this city lost what money it had on hand and nobody was to blame for it.
Copy: 'What seems from the outside like a routine administrative change is part of an ongoing battle between three council members who do not want to defer financial authority to the city administration and four more who want to “let the city manager do his job,” as Councilman Juan Rivera put it Tuesday.' End of copy.
And I too wish to throw my hat into the ring as these 3 council persons are correct in deference to what councilman Rivera has stated in that ' this language, in my opinion, is differentiated by 'having the city manager do his job' and 'allowing the city manager too much authority which can lead to malfeasance of practice'.


Copy: 'Under the current charter language, the council maintains final approval authority for interfund and interdepartmental transfers while the city manager has final authority over the transfer of intradepartmental, or “line-item,” appropriations. This was approved as part of a 33-part charter amendment election in 2013.'
Continuation of copy: 'In practice, City Manager Ron Olson brings “mid-year budget amendments” to the council that predict where the city needs to shift money as the budget progresses. The last time this happened — May 23 — the council approved $609,531 in interdepartmental transfers in the general fund, mostly for unexpected personnel expenditures.' End of copy.
Question: 'Why and/or what were these 'unexpected personnel expenditures'???? It would seem to me that 'there should not, or as at a minimum, be any expenditures of this magnitude', that is if this city is continuing to function in a timely and efficient manner. There should be no occurrences of an occasion of this magnitude if a plan is developed I that it should/could be recognized and not be unrecognized.
Copy from 'City of Killeen, Texas - Draft Resolution: 'Whereas: The Section 73 stipulates that the Charter has final authority and approval over all financial matters down to line item appropriations.'

Continuation of copy: 'Whereas: The proposed amendment would end interdepartmental and intradepartmental transfers in the financial budget.'

Continuation of copy: 'Whereas: The new amendment would not maintain the councils oversight of interfund transfers -such as the moving of money between the city's solid waste fund and general fund. The city should not have the final oversight of transfers between departments within a fund IE: between the fire and police departments.'
Continuation of copy: 'Whereas: The city's finance director should not have final oversight of intradepartmental transfers, specifically line item appropriations.' End of copy.
This city Charter should be confined to what was written in accordance with this city charter and should not deviate from it's original contents and format.
Copy: 'Whereas: this proposed amendment would destroy the Charter that exists between the city manager and the city council in that it continues to delineate the equality of basis between the two by eliminating the checks and balances that have always been a part of the formation of this city manager/city council arrangement.

Whereas: this type of government in which the city manager and city council have always been treated as equal partners in which the city manager has the responsibility to define a budget in which this city shall be operated, and performs the duties of taking care of all day to day operations all under the auspices of the city council which has the defining role of decision making for this city.
Copy:

Council concerns
Olson argues the first amendment would:
1) Make it easier for city staff to manage the budget in real time.
2) Help include department heads in the budget management process.
3) Unclutter City Council meetings with periodic budget amendments.' End of copy.
The annual budget is just another form of what this city has contemplated to be done in the following year, nothing more, nothing less.
In that I do not see what can be said that a department head can not be included as to departmental processes that would exclude a/any department head from being present in discussions pertaining to that particular department.
In as much, the item No. 3) 'Unclutter City Council meetings with periodic budget amendments'. There should not 'be a clutter of periodic budget amendments if the budget and the plan are in accordance with each other. If that is the case then I don't see how 'periodic budget amendments' is going to 'clear the air'.


Whereas: in this new role of accentuating the responsibilities of the city manager and the financial manager for the final oversight of intradepartmental transfers, specifically line items appropriations.

Whereas: The city's finance director should not have final oversight of intradepartmental transfers, specifically line item appropriations.

Whereas: The city manager has not made a move, in an attempt that would delegate additional responsibility for budgetary processes to the department heads by relinquishing the city council of this responsibility. They already have the sole ownership of their individual budgets and responsibility thereof. They already have the responsibility for their individual 'bottom line'.

Whereas: The individual department head has the responsibility for assigning what the bottom line will be for all maintenance programs and new contract work in accordance with the guidelines established for that department.
Copy: 'In an email Wednesday, Johnson said the charter election would be a talking point throughout election season, and he would not back down from publicly opposing it.'
Continuation of copy: “This is a big issue and will be brought up at every political forum,” he said. “I refused to allow our city to take steps backwards. No single individual within our city government should have that kind of unchecked power.” End of copy.
I am in support of the council persons who spoke against this move and so state:
Copy: 'Therefor: Be it resolved, by all members of this city council, that this resolution shall be called for a vote of this 'in-session city council' and voted in the affirmative and placed in action by the rewriting of the charter and within the calling for an affirmative action vote. This charter shall be caused to be rewritten within 30 days from passage of this vote and copies of the shall be caused to delivered to ll city council, mayor, city manager, and all division managers as so noted with return acknowledgment.' End of copy.
This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.58 % who voted.

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