Mystery savings

By From page A4 | August 22, 2014

The members of the El Dorado County Board of Supervisors must have chosen “mystery meat” when they went through the high school cafeteria line in their younger years. That’s what they seem to be putting on their budgetary trays these days.

The mystery meat is the chief administrative officer’s “investment strategy savings.” The CAO pegs the figure at $5 million in a projection for the budget year 2015-16.

During the last board meeting, Aug. 12, Supervisor Ron Mikulaco alluded to this when he said the FENIX system would produce “efficiencies” by needing fewer people. He thought this wonderful FENIX system would reduce the county’s personnel roster through attrition.

What is FENIX? It stands for Fiscal Enterprise and Information Exchange. It’s a $2.9 million contract for what the company selling the system to the county calls MUNIS. It was designed for cities and the company is customizing it for county government. MUNIS stands for Municipal Information System.

The bottom line on these acronyms is it’s a computerized accounting system. It is supposed to replace the current system that is obsolete and no longer supported by the company that sold it to the county in the 1990s.

Will it mean the county will save money by laying off a bunch of accounting types? Heck no. Despite what Mikulaco and other board members have been told, accounting systems don’t save money, especially when there already is a computerized accounting system in place that already replaced paper spreadsheets. An accounting system still requires accounting personnel to enter the data from the different departments.

Here at the Mountain Democrat we are on our third accounting system since going off paper spreadsheets and we have the same number of accountants we’ve had for the past 15 years.

Our news and production departments are on our fourth computer system. It hasn’t led to any personnel savings. Revenue declines have reduced staff counts here just like what happened when the county lost revenue during the recession.

Accounting systems get replaced because their original seller ceases to exist or updates get to be as expensive as buying a whole new system.

What is a computerized accounting system? “Fundamental Accounting Principles” by Kermit D. Larson, John J. Wild and Barbara Chiappetta explains it succinctly: “Accounting information systems consist of people, records methods and equipment.”

“The systems are designed to capture information about a company’s transactions and to provide output including financial managerial and tax reports. All accounting systems have these same goals, and thus share some basic components. These components apply whether or not a system is heavily computerized, yet the components of computerized systems usually provide more accuracy, speed, efficiency and convenience than those of manual systems,” according to “Fundamental Accounting Principles.”

The book further explains there are five components of accounting systems: “source documents, input devices, information processors, information storage and output devices.”

It doesn’t get any simpler than that. Recall that “people” are one of the essential elements of any accounting system. The bigger the organization the more people will be required to make a computerized accounting system have accurate information to process. It ain’t going to be done by robots showing up to work in self-driving Google cars.

So, scratch the “investment strategy savings of $5 million in 2015-16, $7 million in 2016-17, $10 million each fiscal year of 2017-18 and 2018-19.” These savings are not even mystery meat. They are fake.

Even with these fake savings factored in, the CAO’s five-year forecast shows deficits of $12.4 million in 2015-16, $12.8 million in 2016-17, $14 million in 2017-18 and $18.2 million in 2018-19.

Retired Supervisor Jack Sweeney has identified those deficit projections as the amount of money the county spent on 15 percent raises for county employees over three years, except for the new county counsel, who is getting that 15 percent raise all at once. Not even the state is handing out 5 percent raises. Private industry raises more closely conform to inflation of 1-2 percent.

Take away the mystery meat savings and the real deficit projections become $17.2 million in 2015-16, $19.8 million in 2016-17, $24 million in 2017-18 and $28.2 million in 2018-19.

Sorry, Ron, this doesn’t look like “efficiencies.” It looks like fiscal chaos.

Mountain Democrat

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