Wed, Aug

Neighborhood Council Congress: Time to Free the System from City Hall

PERSPECTIVE - The long-anticipated Neighborhood Council Congress is less than two weeks away.
A dedicated group of volunteers, under the leadership of Cindy Cleghorn of Sunland Tujunga,  have succeeded in wresting control of this event from DONE and City Hall.  For the first time, we will truly have a congress that represents the stakeholders and board members.

While NCs have formed regional coalitions which have had some success in exerting influence and grabbing the attention of DONE’s stumbling bureaucracy, there is no substitute for a homegrown, citywide effort designed to promote participation and education – the steps vital to the future of the Neighborhood Council movement.  To paraphrase an old saying, we either stand together or collapse alone.

I regret I will be unable to attend due to business commitments. That’s too bad for me since I have been a frequent critic of City Hall’s disdain for NCs and DONE’s gross mismanagement of the system.

If I could attend, I would address one of the most glaring deficiencies perpetuated by DONE – the failure to establish financial control and reporting.

Neither DONE nor Council Member Paul Krekorian understand what is needed to establish a system of tracking expenses.  This is not a personal criticism – we all have our strengths and weaknesses, but accounting is a core function that should be left in the hands of competent professionals…not necessarily CPAs or MBAs, but people with real world experience in managing the finances of a company or organization.

Allow me outline what is necessary to establish a semblance of a system for Neighborhood Councils.
The most basic requirement is a uniform software application.

There are 95 neighborhood councils and I doubt if any two share the same process.  I suspect Excel is the application of choice for many (that’s what I use), but there are probably an assortment of others with comparable features.

Regardless of the system, the common denominator for effective accounting and reporting is the competence of the treasurer. So why should a neighborhood council with a savvy treasurer be interested in migrating to a uniform system?

Well, people come and go, and so do competent treasurers.  You might have a good one today, but there is no guarantee you will have one tomorrow.

A uniform accounting system will assure the existence of a common pool of knowledge.  When a treasurer leaves on short notice, help and advice would be a local phone call away – not to India.  Chances are, a neighboring NC could talk a replacement through the steps of posting an entry, running a report or reconciling activity to the US Bank statement or DONE’s records.

Quicken would be more than adequate to handle the needs of any NC.  It is essentially an electronic check book with basic reporting and reconcilement features. It is also easy to learn and use. A handful of experienced treasurers could train beginners in group classes.

NCs could submit transaction reports to DONE in a common format with a few clicks. But will DONE have the ability to manage the data once it is received?

If DONE restricts its monitoring to just preventing NCs from exceeding their annual allocations, maybe. If the department attempts to track actual expenses versus line budgets, I can assure you total chaos will reign.

However, DONE has no business tracking budgets by line items – the staff couldn’t do it back in the days when the headcount was several times larger, so why would anyone think they could do it today?  

Besides, budgets will generally be highly individualized. As long as expenditures are in accordance with the city’s purchasing policies and properly documented, it should not make a difference whether funds are spent to support a community project or conduct outreach.  Line item spending decisions are best left to those closest to the neighborhoods.

Even if DONE limits its expense tracking to the aggregate allocation level, I have my doubts they could maintain the process. This is why I strongly support establishing and empowering a Neighborhood Council Accounting Standards Board to assume responsibility for all consolidated reporting and financial supervision of the NCs.

The operations of the Standards Board would be funded by eliminating two positions at DONE and transferring the savings to an account monitored by the City Controller. The Board would draw against the account to fund training and provide personnel support to NCs in need of assistance.

Each NC would also have a small portion of its annual allocation transferred into the account as a reserve for remedial interventions. For example, non compliance with funding policies by a neighborhood council could lead to the Standards Board transferring  accounting responsibility to a third-party (if not suspension of funding).

The members of the Standards Board would be elected by NCs (one vote for each Board in good standing) from a pool of candidates with proven skills and appropriate backgrounds.

Consolidation of NC accounting data will require basic balancing controls – simple for the average accountant or bookkeeper, but probably too complicated for DONE’s staff.

Ideally, checking accounts, or convenience checks connected to the US Bank purchasing card accounts, would facilitate a far less costly alternative to demand warrants.  I did submit procedural controls for checking accounts to Mr. Krekorian prior to his NC town halls, but he was reluctant to pursue the concept.

If Neighborhood Councils truly want to be independent, establishing control of finances will be an essential step.

(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village.  He blogs at Village to Village and can be reached at:   [email protected] )

Tags: Neighborhood Council Congress, neighborhood councils, NCs, DONE, Paul Krekorian, CPA, MBA, treasurer, neighborhood council treasurer, City Controller

Vol 9 Issue 74
Pub: Sept 16, 2011