Should Laguna's City Council provide financial leadership?

How is business managed?

As a Certified Public Accountant, I have spent my professional life helping businesses become more effective at what they do. Part of how I help them is assuring that those businesses plan--budget--their money so that their financial goals are compatible with their other goals. In firms, financial goals usually have to do with profits.

A second part of what I suggest to clients is that they check their actual performance against their budgets. Businesses often check performance using techniques from cost accounting, which compares actual costs and usage during a year to expectations of cost and usage.

For example, a business might plan for a cost of a gallon of gas at $1.70 with an expectation that it will use 1000 gallons of gas during the year. As it goes through the year, the price of gas may change. The business would have no control over that. But we might discover that, although the price of gas hasn't changed, the business is spending at the rate of $1.85 per gallon. In that case, we'd want to look at the reasons for that difference­is someone using premium in a car that works just as well on regular, or is someone skimming a little bit with each purchase? Either of the latter would be a cause for alarm.

How are cities managed?

Cities, like businesses, need to assure that their financial goals are in sync with their other plans. In cities, financial goals usually have to do with meeting the needs of citizens. Public hearings encourage citizen input to the budget, and cities should also use cost accounting where appropriate. In Laguna, for example, it makes perfect sense for us to use cost accounting where we have measurable standards, such as acres of grass to be kept mowed or miles of sewers to be maintained. This system will allow the managers in Laguna to run our city like a business, with efficiency.

However, cost accounting has a weakness. It puts the managers of the business--in this case the City Council--into a situation where they must know all of the "hidden" things that need to be done, or they will be cost wise and financially foolish. For example, not maintaining sewers can make a hero of a financial manager for many years. Sewers take a while to disintegrate, and not spending money on them before they have disintegrated, while terrible long run policy, provides spendable cash for the City.

The City Council must stay on top of all the "maintenance" items that need to be done, and the budget must reflect them. That requires both a city management and a City Council that is attuned to the financial aspects of the city. If the Council does not have financial expertise, all of us are at risk for what is going to be missed.

What should you do?

I hope that you will consider our City's need for financial expertise on the City Council when you cast your vote on November 7. You will find the name Cheryl Kinsman, Certified Public Accountant, at the top of your ballot. If you believe that our city needs someone on the Council who understands the finances of this City, rather than having a Council that simply accepts the advice of its staff, please vote Kinsman for Council.

I want to see more of Cheryl's commentaries--return me to the commentaries page!

Last updated 9/21/00.