FReeper running for City Council has question....

Myself | 03/27/02 | Invoman

[invoman]

I have an idea to save money within the City's Budget, and would like to know if anyone out there has heard of it before and if so, how did it work (or not work)...

In short it works like this:

In each Department, For every dollar they come in under budget, the employees receive 25% of that dollar in a year end bonus.

Does this work? Did it work? Is there a similar incentive plan that works?

I'm running for city council....so I am looking for good ideas.

[coloradan]

For every dollar over budget, the dollar comes 100% out of the councilmember's paychecks.

[thinktwice]

Guess who gets blamed for every pothole, etc., thereafter appearing -- and not fixed immediately -- in your town.

[Hodar]

Whoa ... 25% is a pretty large figure, especially when one considers how much gov't can spend. Being generally greedy, one such as myself would simply bump my budget by 25%, cut costs where I could, and rake a huge windfall. Also, if I abuse my authority in padding my budget, as a goverment employee; you can't fire me.

A better idea may be to target a reduction of 'x%' and a percentage (1-2%)every dollar below that figure is spread in the form of a bonus, divided as a percentage of the employee's income. This would reward managers more than workers, thus get management to back your movement. Without management backing, no idea has a chance.

[KC Burke]

In private industry, when such is adopted accross the board with employees, there will be a certain percentage that violate all forms of reasonableness, proper behavior and even law in an attempt to garner the promised 25% of the savings. They might outright cheat customers, lie to creditors, dummy books and do other things to maximize their concept of the reward offered. The added level of supervision and management required to properly prevent that small percentage from wrecking havoc is excessive if they are given free reign in their interpretation of what is allowed.

Now if you mean to very carefully and thoughly define what is allowed for the proper function of the department and each job position under such a scheme, I think just doing the nasty budget and management tasks would probably be less work in the long run.

[Freakazoid]

I understand the intention, and it's a noble one, but I see a big problem with it. Department heads will pad their budget to get year-end bonuses for themselves and their employees.

[OldFriend]

Probably illegal.

[<1/1,000,000th%]

And then institutionalize the bonus. Cost reduction bonus awards lend themselves to fraud too, even in the private sector. You're picking a tough nut to crack and I congratulate you.

What if you put a bonus in place based on previous year's spending? If the budget is flat to inflation, everyone gets a 10% bonus. If the budget shrinks 5% everyone gets a 20% bonus. If the budget goes up half of inflation, evryone gets a 5% bonus.

Not sure how this'll work. Especially if you've got a lot of growth in the area. And budgeting the bonuses has to be outside the regular budget, which is another headache.

Good luck with this. I'll be looking to see you on the cover page of the Wall Street Journal if it works.

[Straight Vermonter]

My company, IBM, has a program that has each project cutting costs by about 10% every year. This means if the budget is for $100 million dollars the project has to cut $10 million off it not 10% off the previous years budget. While there is some potential for "budget padding" there is not really too much since year to year projections can not increase too greaty.

Now the really cool part of this process is that the spending cuts have to be continuous. For example, if there is a mild winter and not much plowing or salting is need then that is NOT a countable savings. If salt can be bought cheaper or plowing can be contracted out cheaper than those would be countable ideas. For each countable ideas the employees (or in your case even ordinary citizens) get a $150 award. We average 2 ideas per employee per year.

I ran my projects program in 2000 and we save $13M on a budget of $93!

[coloradan]

Hey, they're responsible for the city's budget, I don't see why they shouldn't be good at budgeting. Oh that's right, they're government, they don't have to be good at what they do to keep their jobs, that's for the private sector. Besides, maybe they can skimp on the Transgendered Persons Of Color Appreciation Day Parade, or similar budgetal detritus, when funds start getting tight. If it were that or the potholes, I'd do the potholes and look for re-election.

[randog]

You (and several others) nailed it on the head. I've worked at companies that had this type of policy and it usually meant that the employees were micro-managed and second-guessed on everything they did. Not a good way to do business.

[invoman]

Our city budget is approx 121 million dollars. right now there is no incentive for the employees to save money...they either spend it or lose it in the next budget rounds.

I'm looking for incentives for the employees to save money.

[invoman]

Not really, but it's a good point. Perhaps tying it to complaints to each department? Complaints offset any bonus?

[Great Dane]

I am sure it will work, but shouldn't the employee be careful with taxpayers money without getting bribed.

[invoman]

While I agree with your last point in principle, the nasty cuts you describe end up with potholes...the city workers take it out on the citizens.

If there is no incentive to the employees...as a matter of fact the incentive is to spend it.

We are a city of approx. 50,000 people. We could structure it to run one year and re-evaluate it?

[invoman]

The city is small enough that padding will be noticed...by us or other department heads. Granted this would need to be 'fleshed out'. But currently the lack of incentive isn't even there. The incentive is to spend it or lose it.

[invoman]

There is a bit of the rub...already our city employees are below the mean and or average. The city gives out wage adjustments because it is so below average.

The wages are already low, so the people working there are working at what they feel their wages are...low.

They're right. They are trying to do a wage study...and the employees will probably still get a raise...and STILL not have any incentive to save money.

[invoman]

There is a bit of the rub...already our city employees are below the mean and or average. The city gives out wage adjustments because it is so below average.

The wages are already low, so the people working there are working at what they feel their wages are...low.

They're right. They are trying to do a wage study...and the employees will probably still get a raise...and STILL not have any incentive to save money.

[Rowdee]

Well, you just might consider privatizing some of the government's business......at least let the word spread that you are looking at privatizing....that might shake enough of them up to get them to talk to you about ways to become more efficient.

When I ran for office back in the mid 1980s, I believe it was the City of Phoenix that recognized huge savings by privatizing some of what was deemed government duties, i.e., trash collecting.....and as I recall, the efficiency resulting from privatizing was a high percentage.

When I attended the State GOP convention when I ran, I was able to get this into the platform of the state party.

[invoman]

Could you re-explain this program?

I am sorry, I don't quite understand it and it seems to be interesting.