Monday, October 12, 2009

Budgeting by trial and error (rates)?

As I was looking at the Behavioral Health Division (BHD) numbers in Scott Walker's proposed budget it raised several important concerns. On Friday I addressed one of those by showing that Walker's plan to privatize Targeted Case Management (TCM) and the Community Support Program (CSP) would actually cost the county more. As I was looking at the data, a more fundamental concern quickly appeared. There appears to be a significant disconnect between the original BHD budget that was submitted to Walker and what ended up in his own proposed budget.

When you look at the BHD budget it suggests that privatizing two programs would save $637,289. They appear to have arrived at this figure by considering salaries only. In Walker's budget he suggests less savings ($593,390) and he has added "fringe savings" to the equation. Exactly how can these two budgets within the same administration regarding the same division and the same programs be so fundamentally different? Those differences can't help but make you wonder about the accuracy and conclusions of both budgets.

Naturally I don't consider myself an expert on the minutia of this specific subject, so initially I assumed that I might be missing some unspecified detail that explains the disconnect between the two budgets. But after reading an analysis by a person that is an expert on the BHD and on these programs in particular, I felt that my original concern was in fact warranted. That analysis was presented to the County Board last week, and makes the following observation on this matter:

Based on the Milwaukee County Executive's budget, 56% of the total salary cost was added onto the salaries to come up to numbers reported in the budget. When you look at the reported savings of $593,390.00 and reduce it accordingly to see the salary costs, the salary savings for the Milwaukee County Executive's budget is $380,378.00.

The reason this is important is that in the first budget submitted by BHD reported that the salary savings alone would be $637,289.00 for 2010. However, now in the Milwaukee County Executive's budget the salary savings is $380,378.00 a difference of $256,911.00 or more significantly, a 67.5% error rate between the two budgets.

Not only do the original BHD and Walker budgets have fundamental differences but there is also a whopping 67.5% error rate between the two? Exactly how are we supposed to trust the claims of two budgets for the same division that say such drastically different things? How can anyone make an informed decision based on this apparent disconnect? Someone may want to explain this difference or the Walker Administration should go back to the drawing board and come back with numbers that don't conflict from within his own administration. That would be more preferable than trying to rely on something that appears to be suspect. It really makes you wonder if people down there are just making it up as they go along. I have heard of doing things by trial and error, but I have never heard of sound budgeting by trial and a massive error rate.


Anonymous said...

While in no way coming to the defense of County Executive Walker’s budget, I must point out that if the “. . . analysis by a person that is an expert on the BHD and on these programs in particular . . .” referred to was written by a BHD employee whose initials are “DH”, then that report is not worth the paper it’s printed on.

I will stipulate that DH may be an excellent clinician, but DH lacks even a basic understanding of the fundamentals of budgeting. DH’s skills in understanding and applying the principles of cost allocation methodology are even more suspect.

DH also buys into that old bromide that “there are too many managers” and that getting rid of this perceived excess will solve all BHD’s problems. What DH appears to fail to comprehend is that just because a given County employee is not represented by a union does not mean that employee is a “manager”. Many non-represented employees work in direct support roles for management, and are thus “front-line” workers of a different sort.

Any fiscal analysis DH provides is nothing short of fiction and cannot be relied upon for planning purposes.

Cory Liebmann said...

well, you obviously have some strong opinions about the person that you are talking about, but I'm not going to address them. i think it is more productive to talk about the facts and/or assertions involved in this blog posting. for example: there appears to be a disconnect between the two there or isn't there and why? if there isn't then what am i missing here?

The "manager/not manager" thing is not something that I brought up here or in any other blog posting as far as I can remember. so there isn't much that i can say about that specific issue.