News & Insights

Municipal, Opinion

Why isn’t anybody talking about Horizontal Succession Planning?

A 2014 study by Stanford University School of Business found 46 percent of companies surveyed had a succession plan in place, but only 25 percent had a ready pool of successor candidates.

And, it’s even worse in the public sector, where 30-40 percent of the workforce is predicted to retire in the next decade and only 2 percent of recent graduates plan to enter the public sector. Despite the dismal future employee outlook, most studies of public sector succession planning have found that only 25 to 30 percent of organizations have a formal plan in place.

In organizations that do have a plan in place, there is a lack of consensus between managers and the workforce about the knowledge and skills it takes to fill top-level positions in the organization.

Failing to establish a succession plan could lead to catastrophic failures of service, failure to collect taxes or other fees, and organizational dysfunction that might take months or years to fix. With tight budgets, a dwindling workforce and more urgent matters at hand, most managers are hard pressed to find the time to do something that seems so far down the road. It doesn’t have to take extensive time, energy or funding to plan for the future and safeguard institutional knowledge.

Have we been looking at succession planning the wrong way?

Most organizations look at succession planning as a vertical ladder, where managers identify and train employees who will eventually fill their spot when they retire. While it is still important to identify and mentor promising employees, this method of succession planning usually is focused on the C-suite and any number of unforeseen circumstances can turn the entire plan on its head in an instant.

Maybe it’s time to approach succession planning on the horizontal plane.

Horizontal succession planning is the element that protects institutional knowledge across the organization, provides cover if a plan fails — for example if the heir apparent takes a last-minute position with another organization — and allows for seamless transitions at all levels of the organization.

Education, Fiscal Health, Fiscal Stress, Municipal, News, Opinion

Finally, it’s not the economy; unfortunately, it’s still the education void

By: Bob Kittle

If it ain’t one thing, it’s another. Perhaps not the best way to start a blog that is ultimately on education, but as the economy hums along (despite some potentially scary headwinds with the recent GM announcement) education is the nemesis that Michigan (or at least Detroit) can’t seem to conquer.

The Detroit Regional Chamber recently released its 2018-2019 State of the Region providing economic indicators and critical areas of improvement for its 11-county region plus Detroit. The report overall offered an upbeat outlook on the region’s progress in many sectors, but underscored the importance in addressing areas in which the region continues to lag – notably education. In a spot-on Detroit News column by Daniel Howes, the education void is so dark and vast, its challenges may temper many of the positive gains made in the region and the state for recent years.

The good news is that Detroit is outpacing the nation in growth in real gross domestic product (2.7 percent vs. 2.2 percent nationally) and per capita income (4.3 percent compared to 4.1 percent nationally). That can’t be overlooked. Nor can the fact that Detroit was second in the nation in growth of median home values between 2013 and 2017, increasing by 42.4 percent (Seattle was number one). The high cost of living on the East and West Coasts makes Detroit attractive—a plus for companies aiming to boost and cultivate tech talent.

But contradicting these positive indicators are critical areas where Detroit is missing out, notably extreme poverty, low metrics on community well-being, and stagnant population growth. Yet the most pressing issue is the mediocre status of Detroit’s educational attainment—which was actually below the national numbers in 2017.

Education, Fiscal Health, Fiscal Stress, K-12, News

Cities & Schools Reach Crisis Point Due to States’ Low Economic Reserves

A recent article in the Wall Street Journal (Many States Are Unprepared for Next Economic Downturn) caught my attention because it highlighted a key factor adding to the fiscal stress of municipalities and schools.  The article suggested that most states are unprepared for an inevitable economic downturn as they lack the necessary fiscal reserves or rainy-day funds to cushion the next financial blow, and, it’s already having a negative trickle-down effect.

Forced to do more with less since the last recession, cities and schools are continually struggling with reduced revenue sharing from their states while scrambling to meet the demands of unfunded mandates, retiree obligations, an aging infrastructure and even increased student testing. Add this to the anticipated silver tsunami caused by public sector retirements in the next decade, we see a myriad of local governments that are already stretched too thin and have reached a crisis point.

One of the most alarming things noted in the WSJ article was that some states appear to have little sense of urgency and limited tools to address these budgetary shortfalls. Forget crisis point—this dilemma will have far-reaching and long-term consequences for the populations served by those who gloss over the unavoidable hard truth and do nothing about it now.

Fiscal Health, Fiscal Stress, Municipal, News, Opinion

At least for now, Michigan closes the chapter on Emergency Financial Managers

By: Bob Kittle and Katrina Powell

The State of Michigan Department of the Treasury sent out a press release on June 27, 2018 announcing that for the first time in 18 years, neither a school district or municipality in Michigan has an emergency manager. You can read the press release in its entirety here, but following is an excerpt.

“LANSING, Mich. – State Treasurer Nick Khouri today announced that no Michigan municipality or school district is under state financial oversight through an emergency manager for the first time in nearly 18 years. The…announcement comes after releasing Highland Park School District from receivership under the Local Financial Stability and Choice Act. Since 2000, there has been an emergency manager providing financial oversight somewhere in Michigan.”

For many years the Emergency Financial Manager (later changed to Emergency Manager or EM) concept was regularly maligned by some constituents, citing it as an overreach of state government at the loss of local control and racially motivated. The term carpetbagger was bandied about as well. One respected national government trade publication headlined a 2012 article, Emergency Financial Managers: Michigan’s Unwelcome Savior. As local government financial advisors ourselves, (Katrina was the State-appointed City Manager for Hamtramck from 2014 to 2017) we, but especially Katrina, have been on the receiving end of some hurtful and untrue verbal attacks about roles and motives.

Education, Fiscal Health, Fiscal Stress, Municipal, Opinion

FY 2025 forecast could spell disaster for many communities

From this point forward, saving every minute and dollar possible in anticipation for what lies ahead will be crucial to survival in the public sector.

Maybe you’ve heard us talk about the silver tsunami, or perhaps you’ve read other articles on it, but the reality is while we all can clearly see what’s coming for us, few of us are doing anything to prepare for it.

Let’s be clear about what awaits us: in less than 10 years’ time almost half of the public sector workforce will retire.

Conservative estimates put the looming exodus at 40 percent. Depending on the make-up of your workforce this mass departure could happen at a more subtle pace throughout the next decade or it could happen almost over night, in a single fiscal year or season. Regardless of the makeup of your workforce, the coming silver tsunami will leave destruction in its wake.

Education, Municipal, Opinion

Start Your Second Quarter Plans With These 3 Considerations

Bob KittleWith the first quarter behind us, the following three topics are high-value items to consider in Q2 for planning purposes:

Infrastructure Planning

The problems associated with aging infrastructure can cripple municipal budgets, but with proper planning, communities can strategically use their revenue when and where it counts most. The most effective way to plan for infrastructure improvements is to create an inventory of assets, public lands and utilities, noting: the present condition; when repairs were last made and how long they are expected to last; the cost and time associated with needed repairs; and average usage. Many states statutorily require this to be performed.

Once you have a complete inventory, use common sense and data science to plan projects. Avoid redundancy and lower costs by planning street projects with local utilities. Address potholes and surface damage by assessing the extent of the damage, the risk to safety and average traffic flow. Align infrastructure planning across all departments. Maintaining centralized oversight of large infrastructure projects and ensuring all staff members adhere to an internal communications plan, decreases risks of redundancy and improves timeline efficiency.

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Education, Fiscal Health, Fiscal Stress, Municipal, Opinion

FY 2025 forecast could spell disaster for many communities

From this point forward, saving every minute and dollar possible in anticipation for what lies ahead will be crucial to survival in the public sector.

Maybe you’ve heard us talk about the silver tsunami, or perhaps you’ve read other articles on it, but the reality is while we all can clearly see what’s coming for us, few of us are doing anything to prepare for it.

Let’s be clear about what awaits us: in less than 10 years’ time almost half of the public sector workforce will retire.

Conservative estimates put the looming exodus at 40 percent. Depending on the make-up of your workforce this mass departure could happen at a more subtle pace throughout the next decade or it could happen almost over night, in a single fiscal year or season. Regardless of the makeup of your workforce, the coming silver tsunami will leave destruction in its wake.

Education, Municipal, Opinion

Start Your Second Quarter Plans With These 3 Considerations

Bob KittleWith the first quarter behind us, the following three topics are high-value items to consider in Q2 for planning purposes:

Infrastructure Planning

The problems associated with aging infrastructure can cripple municipal budgets, but with proper planning, communities can strategically use their revenue when and where it counts most. The most effective way to plan for infrastructure improvements is to create an inventory of assets, public lands and utilities, noting: the present condition; when repairs were last made and how long they are expected to last; the cost and time associated with needed repairs; and average usage. Many states statutorily require this to be performed.

Once you have a complete inventory, use common sense and data science to plan projects. Avoid redundancy and lower costs by planning street projects with local utilities. Address potholes and surface damage by assessing the extent of the damage, the risk to safety and average traffic flow. Align infrastructure planning across all departments. Maintaining centralized oversight of large infrastructure projects and ensuring all staff members adhere to an internal communications plan, decreases risks of redundancy and improves timeline efficiency.

Education, Municipal, Opinion

The Talking Database: Giving Voice to Government Data

Munetrix Blog - The Talking Database

Advancements in data analysis technology can help school districts and local governments identify and thwart financial crises.

Government data tells a story that can only be read when it’s written in a language we all understand.

Transparency in government is an oft-used catch phrase that’s defined differently from one person to the next. States regulate what data must be provided to the public and sometimes how that data is displayed, but for the most part it is a free for all that results in communities posting fancy charts that average people — both residents and employees — have little time and inclination to understand. Reading lines on a chart or graph is one thing, but walking away with an understanding of the full picture and what it means down the road is another.

Municipal, Opinion

Jobs, Jobs, Jobs or People, People, People?

I get a kick when politicians say they are going to create jobs when there are so many jobs out there now, just not enough people to fill them.

In the public sector, this is really going to hit home in the next 3-10 years, when the tail end of the baby-boomers reach the age of retirement, or 65. When I ask local government leaders what percentage of their workforce will retire in the next decade, they tell me at least 30%, which could even be low. Those who can retire with a pension at age 55 for example, will not stick around to 65; but some of them will continue to work post retirement as 1099s or will part time it at another local government due to the shortage their leaving has on the overall public sector workforce.

Education, News

Michigan Education Finance Study

I was reading the just released Augenblick, Palaich & Associates (APA) report titled, Michigan Education Finance Study, commissioned to them by the Michigan Department of Treasury.   The report suggests that there is inadequacy in funding to Michigan Public Schools.

Really?

My first thought was, “We needed to pay $399,000 of taxpayer money to have somebody from Colorado tell us this in a 224 page report?” That’s $1,781 per page!  This subject has been researched and talked about for years.

So I sent a note to my longtime friend, Eric Lupher, Executive Director of the Citizen’s Research Council of Michigan, a non-profit, non-partisan, 100-year-old think tank, probably the best think tank there is, and I asked him for his opinion.

The reply I received was so special I have to share it with you. As you know, Munetrix tries to put complicated government “things” into a context anybody can understand, and Eric just trumped us with his simplicity to my question about the APA report.

“Think of it (the APA Report) like getting a diagnosis for your car.  You know it isn’t working right. It’s making a strange noise, but you don’t know what’s causing the noise.  You’ve just paid the mechanic certified in automotive technology to figure out the root of the problem.  Now, we as a state have to decide whether we want to pay to get the problem fixed or if we can live with the annoying noise the system is making.  The system functions, but not in an optim148785_503602589682411_301510673_nal way.  We know that more money, better directed, can improve the performance.  But that costs money.  Are we content to eat out a few less times each week?  To live without cable for a while?

You could have trusted your neighbor (someone inside the state) to diagnose the problem, but your wife would dismiss the diagnosis because the neighbor isn’t certified and probably has preconceived notions about the problem.  So you go to an outsider, APA in this case, for the diagnosis.”

Capiche?

Eric Lupher, Executive Director – Citizens Research Council of Michigan

Mr. Lupher – I couldn’t have gotten this one any better than that. I, and anyone else who reads this, thank you for your succinct, analogous explanation.

Bob Kittle, President & CEO, Munetrix LLC

Opinion

Why do virtual academies get the same per-student funding as traditional brick and mortar schools?

Along with my business partner, Buzz Brown, I spend a great deal of time each day mired in Michigan local government and school district data and often ask myself questions about the information the data provides. For example, on the hot-button topic of school funding, the state provides equal state reimbursement for students who attend a virtual school, versus a traditional K12 or charter school.  Why?  Is this trend filling the coffers of for-profit virtual schools while draining much needed funds from traditional schools?

Municipal, News, Opinion

Can Open Checkbooks Promote Transparency In Local Governments and Prevent Theft?

The recent news in the Oakland Press about the City of Oak Park’s former clerk siphoning $433,000 out of the city’s coffers over a 2-year period made me think … would a higher level of transparency by the city have been able to thwart such an incident?

Within the Munetrix toolbox is a Dynamic Check Register that takes the transparency discussion to the next level.  Local governments have the ability to export their vendor accounts payable files directly from their accounting software into a publicly accessible, searchable database.  Some refer to this as “Open Checkbook” but it by itself is only a fraction what it takes to truly be transparent.

Municipal, News, Opinion

Police: Tough and Smart

As Mayor Pro-tem for the City of Auburn Hills, I was fortunate to have the opportunity to address the men and women in uniform at the Annual Police Department Awards Banquet Dinner.  Below are my my remarks.  

I’m honored to have the opportunity to share in this important function with you and your families tonight. I’ll work to keep my comments to a minimum.  When I tried to think up words that best describe my view of what it means to be a police officer, I came up with the following list:

  • Hard Working
  • Smart
  • Caringpolice-hat
  • Transparent
  • Ethical
  • Dedicated

I’m sure I missed a couple, but I’ll take a couple minutes to share how I correlate each of those to your public servitude.

News

Data, or Information

The digital age has made an abundance of data available to “consumers” but it begs the question, “What information does it provide us?”

I recently sat through a presentation on Traffic Crash Results for a local government.  As part of the presentation, there was a comparison of two neighboring communities, one with 22,600 crashes and the other with 22,100 (data). I didn’t know if the lower number was better, or not.

What was missing was the ability to put the numbers into context. How many residents did each local government serve? What was the number of lane miles or geographic square miles each had. And what was the cost associated with this segment of the public safety budget patrolling these assets (data).

Fiscal Health, Fiscal Stress, Municipal, News, Opinion

Local Government Early Warning Indicators

There is no shortage of articles and white papers addressing the topic of “Local Government Early Warning Indicators.” However, very few offer a concise methodology to address the issue; and most don’t draw any meaningful recommendations to address the dynamics local governments face in today’s new normal.

According to an Alison Wiltshire paper, Developing Early Warning Systems: A Checklist, there are four elements of a people-centered Early Warning System. Why people-centered? Because the average person must be able to grasp the concepts of the message heeded. Mathematicians, researchers and academics are not the ones who will be dealing with a fiscal calamity as it unfolds. The concept of “early” indicates that one would want to understand the issue well in advance in order to act proactively.

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