How The Money Gets Spent

In simple terms, the city budget shows the amount of money dedicated to each department or functional area and then tracks expenses by each. For example, we can see in the financial report for April 30, 2010, the Police Department's numbers:

Total 2010 Budget	$3,474,119.00
Expected Spend by April 30, 2010	$2,026,569.00
Actual Amount Spent	$2,150,887.00
Percent of Planned	106.10%

Now here's the problem. This does not explain usefully how the money is spent. There are breakdowns Salaries $xxxx or Benefits $xxx or Facilities $xxxx but these breakdowns again don't explain what is being done with the money.

To understand that, you have to look deeper. A good question to ask is "What does a department actually do and how can we measure what gets done?" Using the PD as an example, they do certain things:

Respond to Crime Reports
Respond to Emergencies
Respond to Non Emergencies
Patrol the City Streets
Educate the Community
Investigate Property Crimes
Support Prosecutions
etc.

Getting an idea of how many of each of these outcomes are done and figuring the cost of each one starts to give a new view of what the cost of maintaining a police department is and what the effects of cuts will look like.

It's called Outcome Based Costing and it is a discipline designed to uncover the actual per unit costs of work and services. When it gets more complex, it also includes the cost per unit of activity to support the outcomes. This is known as Activity Based Costing. The Federal Government has been using this approach since the early 1990's, across administrations and congresses to understand the budget and spend.

It's huge and complex when you are talking about organizations the size of the Federal Government or even at the County level, but at the small municipal level, the complexity is far lower and is a question of dedicating time and not getting too involved in precision.

The big advantage of course is that properly done, it clarifies for the final stakeholders, the citizens, what services cost. This is critical to understand when cutting services.

At the Community Forum and in previous meetings, several people spoke for example of Dispatch as being essential to their sense of well being in North Bay Village. Let's take a look at that.

In the City Budget, the annual cost of dispatch is around $250,000. The function of dispatch is to quickly answer response calls and direct the issue quickly to the right resources, sort of a local 911.

In April, 2010, dispatch handled 226 calls plus 21 walk-ins. So here's some math:

247 Dispatches (includes both call-in and walk-in.)
Approximately $20,833 for April (Annual Budget divided by 365 days times 30 days in April.)

Cost Per Dispatch Response: $84
Average Dispatch Response Per Day: 8.23
Average Dispatch Per Eight Hour Shift: 2.74 Calls per shift.

On the surface, that doesn't look like a very good investment. It's clear that to some local dispatch matters, but maybe there are ways to add local dispatch with the existing force. Maybe NBV Dispatch could handle more calls, say 3 per hour, and we could sell the service to other cities that are also facing shortfalls. The impression that 911 in Miami-Dade is a horror show is wrong. Miami-Dade, along with Los Angeles, provides training to cities across the US on how to do it right.

I am not arguing that these numbers above are finally defensible. Dispatch has other duties and sometimes a perceived luxury is well worth buying, but you always must know the cost.

In the city's current budget crisis, this information is missing. We are facing dramatic cuts, across the board but mostly with the PD as our ad valorem tax revenue falls and it's time to take every serious effort to understand what we are cutting.

Kevin Vericker
June 6, 2010