Budet Problems - Time for change?

 Is it time for some changes here? Revisited!  

                                     By Vince DelaRosa

Green Bay, WI – This is a re-printed/re-tooled article from a January 2011 blog that I did.

Listed below here is an e-mail I sent to a very high ranking tribal official on December 11, 2009. I wanted to share this e-mail with my readers to get some wheels turning and some ideas generated about what I view to be one of the most blaring weak spots in our operations. Today, we have very weak auditing systems and non-existent financial regulatory systems. These are conditions that are a classical recipe for financial collapse.

We do not have stimulus dollars on the ready to rescue us, and these weaknesses are proving to be almost too much for us to handle. In Oneida, we run a largely cash operation, the casino, and we have weak regulations to govern in this area. How did we get to this point?

We really have to elevate our level of thinking around here when it comes to the financial side of our operation. I tried to advance a Budget Management Act when I was in office, but I could not get support. In fact, it has been said on many occasions, we have too many laws, that is not the case when it comes to financial regulations.

Beside my work in office, when I left office, I have been quietly trying to spur the government on to do good, to reform internally, on its own. On occasion, I have sent out information and made calls to try and nudge reform measures or to advance good programmatic activity. It is clear today, advancing good programmatic activity and nudging reform is going to have to come from the Oneida people in the General Tribal Council (GTC) meetings.

Remember, the e-mail listed below, I sent that out two (2) years ago. Today, some two years later, nothing has been done around these matters and we have budget problems. In fact, we have a $479,172,033.00 budget. We have almost four-hundred and eighty-million dollars in budgetary funds. Ironically, we have a projected deficit of $47,581,587.00 over the next two years. How is this even possible?

If you look at the budget packet for the last budget meeting, the Treasurer revealed in a letter to the GTC that the tribe is facing "extreme difficulty in keeping operational cost in line with FY2011-2013 revenue projections."  The Treasurer went on to say, in this same letter to the GTC, "both 2012 and FY2013 are projected to have deficit balances of -$34,680,688.00 and -$12,900,899.00 respectively." Why can’t the OBC keep operational cost in line with revenue projections?

The answer is simple, we have a very flawed budget process and we have no real financial regulatory systems, virtually non-existent. Now don’t get me wrong, there are some systems in place, mostly accounting procedures. But there is a world of difference between having accounting manuals and having financial regulatory structures, there is a vast difference. Under one system you can have your hand slapped, under another system you can be fired if you are out of line with financial regulations. We have people that have committed financial fraud against us and they are still receiving per-capita payments, why are we allowing this type of behavior to go on?

Some want to lay all of this on the economy, but let’s be honest, we have been over spending for some 20 years? Where are the biggest cost points in our budget? I wonder if we really know. Is the upper-end of our payroll system to heavy, or is the lower-end of the payroll system to heavy? Oneida Business Committee (OBC) members can’t even answer that one because they do not look in depth at the wages. I asked to see the wages when I was on the OBC, but I was refused access.

I even authored a memo which I have published here (touch here to see) about the wage systems and some of my concerns. I never received any answers to my questions. I would urge readers to go and listen to the OBC meeting tape from June 11, 2008 and see what kind of support I received from the leaders while trying to address wage issues, it was deplorable; "No support at all." How can the leaders of the organization not know about the true extent of the wages? Why are the wages of the tribe a secret? The time for silence on these matters is gone!

At the time I released the memo below I was trying to promote some thinking around one of the major problems with the tribe today. I have tried to get these systems into place when I was in office, but I did not have the support of the Treasurer at the time. I remember being told, “We do not need more laws!”  “We have too many laws!”

Spending in this government is wasteful, has been for years. Financial regulatory systems are important for a variety of reasons. These systems are needed to permit the people to grab control of financial reforms. Yes we are manning the fort, but things cannot change without some level of reform. We are financially treading water.  

Many, if not most of our businesses are losing money! Some have been losing money for quite some time. Not to mention some of the disastrous investments from the past, Airdiagm and Natures Way comes to mind. Do we need financial regulatory systems and improved auditing oversight systems in place? You bet. This is the key to turning this tribe around financially. We have dead weight and waste that needs to be trimmed away; the time has come to think like real business people. This tribe is our nation and it’s our bread basket. If we do not take good care of our bread basket, we’re going to starve.  The tribe and many of its operations are multi-million dollar business outlets which may be under-performing. We need to get smart about what we’re doing here.

To be able to foster financial change and reform, the Oneida people need mechanisms and regulations in place that they can point to and say, this is not working, we need a change. Pretty soon with the way the economy is going nationally, how will we ever control spending and place spending dollars where they can benefit the people the most? You can’t really rely on management to control their spending, they are a bureaucracy that self-perpetuates themselves, and spend-and-spend, that is what governments do. All management structures need controls put on them. Today, our internal financial budget controls are so weak, the controls have the bite of a toothless lap dog.

If you look at the budget packet for the last budget meeting, the Treasurer herself revealed that the tribe is having "extreme difficulty in keeping operational cost in line with FY2011-2013 revenue projections."  The Treasurer, Tina Danforth is trying, but management seems like they're getting harder to control.

If you were to sift through the budget, you must ask yourself, if we’re having these difficulties why are we spending the way we do? If we can’t afford wages increases, why are we proposing some of the things we do? For example, in the last budget packet, the OBC ask the GTC to support a bird farm (Page 96) proposal while the majority of the OBC did not support a pay raise (Page 60) for the employees. How is this even a logical choice: Birds v. Employees? When is the last time the employees got a pay raise? Luckily the bird idea lost, but so did the employees, no raises this year.

Here is the e-mail I wanted to share with you. I have blocked out the identity of the person I sent this to. Believe me, the person is high ranking! I am also only publishing the most relevant parts of the email.

---------- Forwarded Message ----------

From: <<<Vince DelaRosa>>>
To: XXXXXXX@oneidanation.org
Subject: Hi - Questions and Some Obervations
Date: Fri, 11 Dec 2009 15:04:44 GMT

December 11, 2009

Dear XXXXX:           

……….I understand things are tough financially, but I wanted to ask a few questions and I wanted to share a few observations with you.

Q:  How is the budget looking for possibly adding some spending (next year) on the Oneida Small Business Project 2000? When I was there we started with over 3 million, but I understand the project has been left bone dry. I had policy recommendations to get that back on track (policy reforms) when I was there, maybe we can discuss those.

Q: How do things look for us (Oneida) financially in terms of the next few years?  Where is spending going?

* OBSERVATIONS:

I know that in your position, it is impossible to do everything and be everywhere; people can tend to get stretched very thin. Likewise, I wanted to share some thoughts with you from my experiences there. There are things occurring there that are obviously up-side down, but have been largely overlooked by many people over the last 30 years, or since gaming has emerged.  

Financial Regulatory Systems & Auditing Improvements

It has been my position that the Tribe is in need of a framework of financial policies. Over the years there has been a lot of overspending and waste. I have done a lot of research around these matters and I estimate well over $92 millions dollars (over the last 15 years) has been wasted, lost, this number includes bad investments.

From and analytical standpoint, as a cash business, we should have a financial regulatory system in place. Accounting policies are good, but financial regulations are non-existent, and those are needed. These two really should serve hand-in-hand, meaning accounting policies and financial regulations. Moreover, all of this should be backed-up with strong governmental auditing work. Today our internal auditing work is very impotent. I do have audit certification from the University of Oshkosh and I've recommended many joint changes, both auditing and financial, so maybe we can advance some discussions around these matters in the future.

Also, as the previous Chairman of the Legislative Operating Committee, and as a previous Audit Committee member, I had offered many financial and auditing reforms that could never get any traction. I also wrote a report that spoke to the need for major financial regulatory reform, across the board, but that was also never really understood. The previous Treasurer simply did not support laws or regulation advancements.

What I was recommending, in part, was to advance across the board policy constraints, through a strong OMB type of oversight structure. The idea was to marry both accounting policies and new financial regulations with upgraded auditing procedures and systems. Obviously that would require some major audit level changes. I am curious if you've looked at anything like that? If there was an interest, I'd be glad to discuss assisting with such a project, it is very much needed. The implementation of this type of system would be a historic first for us.

The need to move towards a major financial regulatory oversight system is really needed. This would have prevented things such as Airadigm and Nature's Way, not to mention some of the over-padded budgets and outright needless spending. One of the keys for us, as we move forward is, how effective is some of our public policy? Meaning, does the cost justify the means, and/or is our public policy really yielding results? This is a more sophisticated way of running the government.

A financial regulatory oversight system would actually empower your office and the Treasurer's office. Ultimately, the fine-tuning of the oversight on the daily spending of the management structure would be more manageable with a legitimate financial regulatory structure. Additionally, this type of system would allow for more transparency and it would allow your office's to better communicate with the GTC on the finer financial points.

This type of system would also allow for what I witnesses as being so needed, and that was; "Internal financial leadership, guidance, technical expertise and team coordination to support the implementation of fiscal management initiatives." Also, needed was timely and active budget analysis, financial reporting, tighter fiscal controls and aggressive auditing oversight. I wanted to advance all of this, but again, I never had any real support. Today is a new day and maybe we can discuss some approaches around these matters.

This type of system would also allow for the following:

·     * The implementation of government-wide policies and standards with respect to Oneida Tribal regulations and guidance documents;

·     *  The quality, utility, and analytic rigor of information used to support our public policy; (Auditing)

 

·     *  Dissemination of and access to easily understood government financial information;

·     *  Accumulations of unique tribal budgetary statistics

It's worth noting, I have found over the years (10 years) that many people in the government did not understand the difference between running the finances for a private corporation, versus that of a governmental entity/structure.  Private sector versus governmental spending escaped people’s thoughts, they just didn't get it.

In the past I had advanced discussions around a position like a "Policy or Regulatory Specialist" that would work closely with the management teams, directors, area managers, etc. to achieve the budget strategies and priorities the Treasurer or GTC dictated. Duties would have included, as I proposed, providing leadership and active daily oversight for the financial activities of the government.         

Well get me a response when time permits. Take care and I hope you have a good holiday season.

Respectfully,

Vince DelaRosa

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January 9, 2011

After I sent this message out, I never heard back from the official. This person happens to be a great person, but maybe these issues are just too much to deal with. I am not sure. Why that e-mail was not formally responded to in some fashion, I am not sure. But what I am sure of is that this is the core of one of the major problems here. Weak financial systems are really hurting us.

Maybe someday in the future here, these matters can be dealt with. Eliminating wasteful spending with much needed spending, in the new economic environment, is critical to our future success. 

Good government demands that solid financial systems be in place to protect the financial interest of the people.

Respectfully,

Vince DelaRosa