Thomas Jefferson Institute for Public Policy
9035 Golden Sunset Lane
Springfield, Virginia 22153
703/440-9447 · · www.thomasjeffersoninst.org
Michael W. Thompson
Chairman and President
October 8, 2007
Mr. Anthony H. Griffin
County Executive, Fairfax County
12000 Government Center Parkway, Suite 552
Fairfax, VA 22035-0066
Dear Mr. Griffin:
I am writing in response to the September 26, 2007 memorandum to the Board of Supervisors entitled, “Staff Comments on the Thomas Jefferson Institute for Public Policy’s “Seventh Annual Fairfax County Budget Analysis.” I understand that memorandum was sent to the Board of Supervisors in its “packet” of information that arrived on Friday, October 5th.
I find this analysis fascinating in a number of aspects. As I read through it, I couldn’t help but wonder why the staff was so intent on ridiculing the general conclusion of this study which is simply that the County should institute an outside review of spending and that this should become a regular part of the management system in this jurisdiction.
Indeed, the Jefferson Institute is not the only interested party to think that the County spending process needs to have an outside review. In an email endorsement of Chairman Connolly’s re-election effort I received late last week, the Connection newspapers suggested:
The Board of Supervisors should “create a Blue Ribbon commission in the county to study the county budget. It’s a complex, multi-billion dollar document, and the county has more than 11,000 employees. County residents include many civic minded people with extensive expertise in finance and budgets, and supervisors would be well advised to set up an advisory committee to take advantage of that, especially in the coming years of very tight budgets.”
Let me go through this most interesting and revealing Fairfax County staff document from the beginning and comment where I see appropriate. The three headlines below correspond to the County staff memo on the Jefferson Institute budget analysis.
Report Summary:
This is pretty much an accurate analysis of the Thomas Jefferson Institute’s report. However, the Jefferson Institute report did not say that all government
construction projects should be by public-private partnerships as this staff rebuttal states. Our report only said public-private partnerships: “should be the first option
in all cases if the price and product are better.” This misrepresentation was just the first of many in this County staff analysis of our recent study.
Response:
This paragraph tries to de-legitimize the entire approach to this annual analysis through the calculated use of derogatory terms and inaccuracies. Let me explain:
The County staff report calls the general approach in this annual analysis by the Jefferson Institute “simplistic” and “primitive” and accuses the well-respected Blue Ribbon Commission on the Budget (the Cole Commission report of 1992) of being the same. These seem to be tactics of a government bureaucracy which considers itself above outside analysis and is willing to use derogatory terms to attack those who dare to suggest an independent spending review.
This county staff report, by calling the Cole Commission “simplistic” and “primitive,” might not have thought anyone still has that report. However, I do have a copy and here are just some of the seventeen (17) members of that Commission who signed off on this report: Norman Cole, a highly respected business and community leader who died a few years ago and who received the County’s highest award; Dr. Gary Jones, former Chairman of the Fairfax County School Board; Dr. Edward Bersoff, leading businessman in our county and former Chairman of the Fairfax County Chamber of Commerce; Dr. Mark Crain, a nationally recognized economist from George Mason University, headed the Commission’s Revenue Committee that selected the same formula the Thomas Jefferson Institute uses in its annual analysis of the Fairfax County budget; Sidney Dewberry, the highly respected business leader who founded and chairs Dewberry and Davis and is a major philanthropist; Nancy Falk, a former member of the Board of Supervisors who is still active in our community; Dr. James Miller, former Director of the federal Office of Management and Budget; Jeff Carr, Partner at Ernst and Young; David Huddleston, Former Chairman of the Fairfax County Federation of Civic Associations.
In its “Introduction and Study Methodology,” this highly respected Cole Commission report explains (page 4) its analysis of county program and service expenditures:
“Basic growth factors such as Consumer Price Index (CPI) and population (in the case of the schools, student population) were analyzed to determine what County expenditures should have been if only those particular growth factors were taken into account. These data were then compared to actual estimated expenditures for FY 1992 and projected expenditures for FY 1993. It should be noted that the CPI and population growth are “across-the-board” measures that affect most of the many hundreds of elements contained in the County budget.”
This is exactly the methodology used by the Jefferson Institute over the past seven years. I can’t help but wonder why the county staff feels compelled to use the terms “simplistic” and “primitive” when referring to this clearly respected method of analyzing government spending.
Also in this paragraph titled “Response” the county staff analysis states that the Jefferson Institute report, “offers no in-depth analysis of County programs.” That is exactly right and our annual analysis clearly says (see page 6):
“This brief analysis of the Fairfax County budget is not a substitute for a careful management review for each and every program in government and in the school system. This budget analysis is not a detailed critique of the many programs funded by our county or by our schools.”
The purpose of the Jefferson Institute budget report did not require a program by program review analysis. To bring up this issue in the County rebuttal only avoids the purpose of the Institute’s study – to suggest an outside independent review of spending. This seems to be something the staff wants to avoid.
Now let’s continue to review the staff response to the Jefferson Institute’s budget report:
Specific Comments
These County staff comments are most instructive and shows a fascinating and, in many cases, faulty analysis of the Jefferson Institute’s “Fairfax County Budget Analysis.”
Paragraph one is absolutely correct.
In reviewing the budget numbers from the recent Thomas Jefferson Institute’s “Fairfax County Budget Analysis” sent to you several days ago, I indeed found the same error as did the County staff.
One number used in a “bottom line” analysis was not correct as outlined below. Notably, that figure had no relevance to the major thrust of the Jefferson Institute report.
The one error made in our report is reflected on the “new” pages 4 and 5 in the attached narrative to this year’s budget analysis.
This change does not have an impact on the “what if” analysis showing what the spending results would have been had the county’s budget only increased by the CPI and population growth. That is, the comparison of the overall county budget (and the breakouts of the government and school budgets) remains the same: the county spent $1 billion more than it would have had its spending kept pace with the CPI and population growth over the four years covered in this analysis.
The numbers that change in our report dealt with the figures on page 4 outlining the differences between the adopted budget and the actual budget for FY 2004. Inadvertently, we used the number for “Total Available” rather than “Total Disbursements” for this one year. The result is that the four year total for spending beyond the “adopted budgets” is $284,801,732 including the available 2007 numbers. This shows a significant annual average spending “over adopted budget” of $71.2 million for each of the last four years. Although less than the original numbers reported ( $423.3 million over four years and $106 million a year on average), these are still significantly high numbers that should send caution signals to the Board of Supervisors and to the public – and encourage an outside independent group of experts to review the budgets.
Paragraph Two:
This paragraph clearly shows that the County staff feels it is far superior to any outside analysis of the way it spends the taxpayers’ money. The staff feels the budget is far too complex for an outsider to question the rapid growth of expenditures over the past four years. The staff states the obvious, that there are beginning and ending balances to the budget. Well, of course there are but that avoids the issues brought forward in the Jefferson Institute’s budget analysis.
Contrary to the County staff report, the Institute’s report never said the Board of Supervisors did not approve the additional spending beyond the initially approved budget. This report only shows how much additional taxpayers’ money has been spent each of the past four years after the annual budgets were approved.
Paragraph Three:
Once again the staff report ridicules the CPI-population growth analysis as “grossly simplistic.” This is an old and tired debating technique that tries to diminish the messenger’s intellectual capability to truly understand the complexities of the County budget. Well, once again let me point out that Dr. Mark Crain chaired the Revenue Committee of the Cole Commission’s report. Dr. Crain was Director of the George Mason University’s Economics Department’s Graduate Program and served as Assistant Director of the United States Office of Management and Budget. An economic expert of Dr. Crain’s reputation does not use “simplistic” and “primitive” economic methodologies.
In this paragraph the staff report also begins a defense of the county budget as a counter to the criticism detailed in the Jefferson Institute’s study. However, the staff uses 2001 as its base year when the Jefferson Institute used 2004 as the base year for its report. This means all the hours it took for the County staff to write this rebuttal were based on going back seven full years rather than the four years in the Jefferson Institute study. Of course the numbers won’t match since the staff is comparing apples to oranges.
This type of basic error deserves management oversight and this report never should have been sent to the Board of Supervisors with such an obvious error. It only illustrates another example of why an outside independent review of spending is necessary and should be part of the regular budget process.
The staff rebuttal mentions transfers to the school system and debt service as if they were not taken into consideration in the Jefferson Institute report. However, both of these line items were subtracted out of the Fairfax County budget numbers in order to reach the “working budget” numbers used in the Jefferson Institute budget analysis. Had the staff taken the time to fully review the Jefferson Institute analysis it would have known this.
The student population number is a good example of the problem the County staff created when it went back to 2001 rather than the 2004 base year in the Jefferson Institute study. The County staff reports that student population increased by 3500, but that is not so when using the Jefferson Institute base year. Using 2004, as the Jefferson Institute did in this year’s budget analysis, and reviewing the School Board’s budget documents, the student population increased by only 648 and not the 3500 that county staff states. That is an error of 540% by a staff that somehow feels “outsiders” don’t have enough intelligence to criticize the spending in this county.
Even more fascinating in this rebuttal written by the County staff is that this 3500 student increase since FY 2001 is completely inaccurate as well besides starting at the wrong base year. A review school budget documents shows that the student enrollment in FY ’01 was 158,331 and the projected enrollment for FY ’08 is 164,843. This is an increase of 6512 students since 2001 and not 3500 as the County staff maintains. And this from a staff that clearly thinks it is inadvisable to have an independent outside group of experts review the spending of taxpayers’ money.
Further, the staff report tries to justify the school numbers by mentioning the increase in special education and ESOL students. Again, the staff rebuttal relies on
2001 as its base year rather than 2004. But had the staff more carefully read the Jefferson budget analysis, it would have found that the Institute subtracts these costs from its analysis so that they would not be used as an excuse for overspending. Yet the County staff did exactly that.
The County Staff report tries to justify the huge increases in spending beyond the CPI-population formula by discussing full day kindergarten. But again it uses 2001 as its starting date so this rebuttal is faulty on its face.
The staff rebuttal to the Thomas Jefferson Institute’s budget analysis then goes into almost four full pages of specific programs to show that the county is spending the taxpayers’ money on credible programs. Again, the Jefferson Institute’s study made clear it was not analyzing any program, merely pointing out that spending over $1 billion beyond the CPI-population formula in four years should encourage the Supervisors to establish a credible outside committee to review the budget.
Clearly this outside analysis of the county budget by the Jefferson Institute hit a raw nerve and the County staff reacted as if the “peasants” were demanding accountability and this staff was much smarter and could handle the complexities of the county budget without any interference. However, the mere fact that the County staff did not carefully read the Jefferson Institute study and used seven years as its base to rebut the Institute’s analysis rather than four years, indicates that outside help is indeed a good idea.