Aspen City Hall thinking small to save money
ASPEN – About $1.7 million has been socked away by all of the departments within City Hall over the past 15 years, but as the Aspen economy continues to fall on hard times, it will be more difficult for department heads to save money.
Because of cuts made in City Hall, department heads have found themselves having to spend their savings instead of putting money away. It will likely be the same scenario in 2010, said City Manager Steve Barwick.
“It’s being used,” he said, adding the savings accounts are meant to be tapped into for rainy days. “It’s raining.”
The purpose of the city’s carry forward savings program is to give department heads an incentive to be frugal in their spending.
At the end of each year, 50 percent of the savings are carried forward into the respective department’s savings account; 40 percent is returned to the department’s fund balance and 10 percent is allocated to a central savings account.
The central savings account is funneled into the city manager’s department and any expenditure is typically approved by the City Council.
In 2009, the council approved $170,000 in savings to be spent for additional marketing of the resort.
Aspen’s program represents 50 percent of the previous year’s budget savings from each department in City Hall.
The total savings carried forward from 2008 was $1,895,200. What the savings are for 2009 won’t be realized until the year is closed out, according to Don Taylor, city finance director. When it is calculated, the amount will be budgeted for 2010, he added.
The carry forward savings program was established 15 years ago as a way to let department heads have control over their operations with the intent to provide better customer service, be more effective at their jobs and take the bureaucracy out of government spending.
The carry forward savings are mostly used for department heads to fund small expenses needed to meet the requests of the City Council and residents.
Barwick said the program is designed to emulate how small businesses operate.
“It’s the same as what the manager of the Gap is able to do,” he said, adding before the program was instituted, every line item or expense had to be approved by either the council or the city manager. The process was called “bottom line budgeting.”
Before the process was streamlined, Barwick said he remembers sitting through 16 budget meetings with the council that lasted four or five hours each. Elected officials poured over hundreds of line items and never contemplated big picture spending or policies.
“There was no capacity for a manager to manage,” Barwick said. “This gives them the freedom to meet customers’ demands and an incentive to create it with a pool of funds to dip into when they need.”
Barwick cited an example from years ago when the environmental health and streets departments were mandated to lower the PM 10 (particulate pollution) levels in Aspen. But the way that the pollution was measured was from a canister that sat on the roof of a bank building. A city staffer would collect the material and send it to the state for testing but the results weren’t known for 30 days.
Because it was difficult to correct a problem that couldn’t be measured in real time, the two departments found a monitor that read pollution levels on the spot. Both the streets and environmental health departments split the cost and it was paid for from their carry forward savings accounts.
“The streets department was able to do more sweeping and flushing when the levels were high on certain days,” Barwick said, adding Aspen no longer has high PM 10 levels. “We solved a community problem.”
Most government budgets are “time bound,” and have a “use it or lose it” feature, said Assistant City Manager Barry Crook. Without a carry forward savings program, department heads are compelled to spend all of the money they’ve been allocated for the year.
“You tend to spend it at the end of the year,” he said, adding items like computers and furniture that aren’t really necessary are purchased just so the money is spent from the budget.
The other problem with governments that don’t have a savings program is that if a department doesn’t spend all of the money budgeted, their budgets are often reduced the next year.
“There is a bit of a built-in dysfunctional signal,” Crook said. “There are human factors involved and it can send a signal to a manager that ‘I dare not not spend the money.'”
The savings program is part the Aspen government’s overall philosophy that the organization should be able to manage itself by giving department heads the tools needed to do their jobs effectively.
“Department heads empowered to act is so necessary in today’s world,” Barwick said. “Otherwise organizations can’t move fast enough to keep up with demand.”
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