local government finance forum lg fin’ 05 november 16 th 2005 larry. n. mitchell finance &...

Local Government Finance ForumLGfin’05

November 16th 2005

Larry. N. MitchellLarry. N. MitchellFinance & Policy AnalystFinance & Policy Analyst (Local Government)(Local Government)

© Larry Mitchell 2005

2Larry. N. MitchellLarry. N. MitchellFinance & Policy AnalystFinance & Policy Analyst (Local (Local Government)Government)

Agenda

• ‘Financial’ involvement in the LTCCP?(a poll)

• Research paper … data requirements

• A little bit of history

• A case study for setting financial targets

• A case study for monitoring outcomes

• Future developments.


Women are from Venus …but are the LTCCP planners ‘of this world’?

• The Community Plan conference - are we on the same planet? Have we left the planners a vacuum?


Financial involvement in the LTCCP (a poll)

• Are Accountants really involved? Are they interested or have they been outflanked?

• Evidence from Council’s surveyed …less than 1 in 5 (20%) have the Finance second tier ‘Director’ leading the LTCCP team

• The place of the LTFS its prime purpose(s)


It all comes down to the $$$’s

‘We hope to achieve improvements to all well-being outcomes’


What is the purpose?

• All of this (LTCCP) effort must (one hopes) be both pre-meditated and done for a reason …economic gains firstly

• A research paper - Some 'first principles' relating to the nature, extent and quality of the Long-Term Council Community Plan, (ltccp) data … a forerunner to an Audit Guideline? www.kauriglen.co.nz/larry/marketing/LTCCPdataFirstPrinciples.doc


• OAG’s LTCCP audit a ‘self assessment and compliance approach’ which is not very helpful for achieving ‘results’ …

• So what do Councils really want? … and • Who is to lead? • Are we going to get social engineering or

economic rewards?• How will we know?




• The 80:20 rule, Council’s level of discretionary expenditures

• Socio economic goals yes …but social engineering? … I think not.

• The pivotal role of the AMP’s and the LTFS as the basic framework for the LTCCP

• If we want improvements over all QBL outcomes

• It all gets back to the $$$’s in the end …


Research paper LTCCP data requirements

• LTCCP data requirements …why these need to be specified and are important

• High expectations but nominal and sensible ones based on acquiring ‘data fit for the LTCCP purpose’

• An audit compliance ‘tick’ objective … or ‘meaningful and useful’ information serving Council and Community decision making?


The DIA do it … three cheers!


A little bit of history

• Missing in action … the OAG, LGNZ and others?

• DIA… excellent information …as far as it goes.

• StatsNZ help the DIA but …

• LTCCP needs not addressed by DIA and

• No comparative sense …done deliberately

• No sense of goal setting


• Other agencies …disappointing?

• The OAG have not delivered

• Other agencies have cooperated well but LGNZ and SOLGM have not assisted the sector in ‘performance’ and data terms

• Regional Council groupings have shared outcomes and some shared data

• The 80:20 rule applies to social indices

A little bit of history


Why Comparative analysis?• The benchmarking alternative does not work• There is no better available option than

some form of comparative analysis• Targets and Outcomes cannot be set in a

vacuum• There is a need to ‘locate’ every Council’s

present and planned positions using past results, desired results and achieved results whilst employing appropriate target setting, monitoring and reporting tools

• Examples …


Two case studies… for setting financial and economic targets

• Data Mining and

• Monitoring Outcomes


First case study… Data Mining data


First case study… Data Mining report

Council Name Cohort Pop

Roading Exp

PerCapita

WaterExp

PerCapita

Waste-waterExp

PerCapita

Parks &Reserves

ExpPer

Capita

TotalCouncil

Expenditure

TotalPer

Capita

3 YearAverage

PerCapita

% change per capita over last three

years

$000 $ $000 $ $000 $ $000 $ $000 $ $

New Plymouth City 69,200 15,931 230 5,495 79 7,269 105 13,762 199 83,113 1,201 997 17.0%

Hastings Prov 71,100 21,525 303 11,113 156 0 0 4,829 68 63,358 891 867 2.7%

Masterton Prov 23,300 7,119 306 2,577 111 1,813 78 2,254 97 20,802 893 780 12.6%

Palmerston North City 78,100 13,154 168 5,668 73 3,587 46 4,975 64 71,745 919 849 7.5%

Rotorua City 67,800 11,760 173 4,419 65 7,536 111 6,894 102 68,928 1,017 952 6.4%

Timaru Prov 43,100 9,507 221 3,856 89 2,000 46 2,380 55 50,127 1,163 1,097 5.7%

Wanganui Prov 43,600 15,000 344 2,786 64 1,024 23 2,908 67 34,324 787 670 14.9%

Whangarei City 72,200 20,633 286 10,624 147 5,825 81 6,064 84 67,027 928 864 6.9%

AVERAGE 14,329 254 5,817 98 3,632 61 5,508 92 57,428 975 885 9.2%MEDIAN 14,077 258 4,957 84 2,794 62 4,902 76 65,193 923 866 7.2%STD DEVIATION 5,039 65 3,312 36 2,909 39 3,746 46 20,883 143 132 5.0%

Council Current Significant Activity Expenditures


Second case study… monitoring outcomes


Second case study… monitoring outcomes the ‘Outcomes-Results’


Future developments• Put yourself in the 2009 position or later• Ask the ‘thermos flask’ question… How will we

know? … results• The actual results at an Outcomes level of

Outcomes that directly affect Economic Well Being (including Financial Outcomes and Ability to Pay) including …– Why did this we get these results?– What were the influences over these results?– Were the results satisfactory or not?– Comparative assessments– Where do responsibilities lie for the results?


Where to now?

• If you are on road without a map you are either lost, anywhere, nowhere and all of the above

• Consider the need for targeting, monitoring, measurement and reporting tools

• Consider the need for appropriate measurement tools.


A roadmap … or the bush

• ‘If the Outcomes planned and hoped for do not eventuate (or are exceeded)…

• Was this because the target needs adjusting or not? … comparisons at work

• What were the major influences that produced this result? …and were these …

• Due to a worse (or better) performance of NZ Inc or of our District …which one? and by how much?


A roadmap … or the bush … an example

Our local District economy as measured in terms of local Incomes, the local Economy and its Wealth base has grown by say 10% over the three years to 2009 whilst NZ Inc and other similar Councils have grown by only say 6% … what has this been due to?, was it a result that we can take (some) credit for?, and to what degree do we now modify our 2009-2019 LTCCP Outcomes? Go figure.


And now for ….


Larry Mitchell is a Finance & Policy Analyst working with Local Government. His products include ‘Base Stats with Trendz’ reports, which now include

‘Outcomes-Results’ and ‘Data Mining’ benchmarks.

PO Box, Puhoi, Auckland, NZPh: 09 422 0598Fax: 09 422 0700Mobile: 027 479 2328All phones: 0800 784 648Email: [email protected] Website: www.kauriglen.co.nz/larry

local government finance forum lg fin’ 05 november 16 th 2005 larry. n. mitchell finance &...

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