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About Vernonia's voice. (Vernonia, OR) 2007-current | View Entire Issue (Dec. 1, 2007)
Kline’s Q & A
Vernonia City Administrator M.R. “Dick” Kline has been on the job for more than a year. In order to facilitate better communication with local
citizens, as well as a higher profile and more accessibility, Mr. Kline and Vernonia’s Voice have agreed to provide space for citizen questions, with
answers provided by your City Administrator, Dick Kline.
Q: The community of Vernonia has been told that the city is in finan- performed by four city staff, and while not sustainable in the long run, this
cial difficulty. Can you explain what our financial condition is, and “skeleton crew” structure is saving scarce dollars necessary to repay ex-
isting obligations. The public should know that the Council has adopted
what you have been doing to get us back on track?
these changes on my recommendation, in large part to avoid dramatic cuts
A: Once again my compliments to you for a provocative and thoughtful to our police force and public works staff which would be the only other
question; but more importantly, thank you for the opportunity to answer cost-saving alternatives.
it in this column. I will strive to be to the point and completely honest in
A smart citizen might ask, “How can I know that all of this is true and that
the city’s money is being accounted for and spent appropriately?” That
The short answer to your question is that our financial circumstance is concern is also addressed by state law. Each year, every city in Oregon
horrible. Below I will do my best to explain what that means, how we got must have a financial audit performed by an independent CPA firm. These
here, and the steps we have been taking to direct the city to better times. auditors confirm, or correct, the numbers in our accounting system and is-
sue recommendations for program improvement to the City Council. This
When I came to Vernonia, the city had none of the comprehensive plans year’s audit will be conducted in early December. I’m looking forward to
cities typically use to guide their decision-making. Worse yet, I found the results. The auditor’s report this year will help us complete the set up
the fiscal system in significant disarray. To address the lack of planning, of our financial system by providing us with final, authoritative beginning
we have established or revitalized a number of standing committees, in- balances. I’m working with the auditors to make sure that they provide
cluding Public Works and the Community Learning Center, that will help the City Council with comprehensive, unvarnished recommendations for
complete the planning needed to assist the Council in making choices improvement.
informed by a comprehensive understanding of the very complex issues
facing the city. It has taken a year and a half of hard work to keep the city Looking forward, the City’s financial stability is shaky. Even after a sup-
afloat while we reorganized the city accounts and implemented a new plemental budget process and a series of interfund loans, this fiscal year
accounting software system. These changes will help us see a complete (2007-08) started with a number of funds in precarious balance. Like a
picture of the city’s finances in all areas with sufficient detail to make family that begins each month with an overdrawn checking account, Ver-
nonia’s ongoing loan obligations for the Water, Sewer, and Streets Funds
consume more income than we can afford. Worse yet, in the near future,
The City Council and I have made these two main changes in the City’s we face the prospect of more obligations from additional needs in each of
accounting system with guidance from our financial professionals. First, the utilities, sewer and storm water in particular.
we made the city’s chart of accounts more meaningful and comprehen-
sive. These accounts are actually line items in our financial system that The situation is not so bad as to leave me completely disheartened. I be-
represent specific revenues and expenditures. State law requires us to lieve that after two or three years of austerity, the city can recover from
maintain separate funds for distinct departments like the water, sewer, its fiscal mistakes. But this can only happen if we make no further big
street and storm water systems. Other, less obvious departments/funds mistakes. That’s why cities plan. What I find most concerning is that the
like parks, capital projects, and bonded debt must also be carefully sepa- City currently lacks the planning tools necessary to make good strategic
rated and reported individually. Every dollar in materials or wages is now choices. The committees described above are a good start, but we need
being carefully booked to the correct city line item and fund. With this more data, quickly.
new system, we can keep better track of the various City funds/depart-
ments and give the City Council and citizens a clear and accurate account Over the last several months, I have been working to address this need. I
have been working with an experienced public engineer by the name of
for the inflow and outflow of money in the City.
Dale Merrill to review all of Vernonia’s public works systems. Dale’s
We changed the city’s accounting software for two reasons. First, the work has been done pro bono, so far. He will have presented his prelimi-
new system is simpler and more user friendly. As such, the system does nary findings, which were not available at the time of this writing, at the
not require an operator with a strong accounting background to use it November 27 Public Works Committee meeting. Frankly, I do not expect
safely. Second, the new system will save the City at least $5,000/year in it to be a pretty picture. Your newly formed Public Works Committee will
support fees and upgrades as well as significant amounts of staff time. I be busy for the next several years doing the planning necessary to address
believe this new system will allow the City Council to more clearly under- the many public works needs outlined by Dale.
stand the impacts of their choices than has been the case in the past. Since
cities are required to track all of their activities within various funds, poor Good public strategy cannot happen without cooperation. The citizens of
Vernonia really do need to look to the future and find ways to coopera-
accounting systems can really get a city into trouble.
tively work towards addressing these issues. There is little to be gained
Vernonia was in exactly that kind of trouble when I got here. One example by dissecting what happened in the past or looking back for someone to
was the large negative fund balance in the Community Development Fund blame for past practices. It is much like driving a car, looking in the rear
at the beginning of fiscal year 2006-07. The 2006-2007 budget projected view mirror allows you to see where you have been, but in doing so you
the beginning balance of this fund to be almost $128,000. However, once have taken your eyes off of the road ahead and now you aren’t looking
we had the fund audited, it became clear that the actual audited beginning where you are going.
balance was a $384,000 deficit. This single mistake amounted to a nega-
tive cash swing of nearly $512,000 which the city must make up. We are I hope that as we complete this fiscal year and begin planning for the
still working to find a complete solution to plug that deficit. Another ex- 2008-2009 year, the various factions that make up Vernonia can come
ample, described in a previous issue of The Voice, was the inappropriate together to support the various committees, Council, and the new City
spending of more than $100,000 from a city loan reserve fund. Replenish- Administrator. I believe that the city’s plight is too grim to allow divi-
ing these contractually obligated loan reserves necessitated the temporary siveness on the scale we have seen this last year. Only by pulling together
can the city and its people make the best of the hard choices facing them.
$11.50/month surcharge in water rates implemented earlier this year.
I wish you all the best possible result.
Oregon law regulates city bookkeeping, spending, and budgeting, and al-
lows cities to lend money from one fund to another for a term of no more If you have a question you would like to ask of City Administrator
than two years. In order to balance the 2006-07 supplemental budget and Dick Kline, please send them to:
the 2007-08 regular budget, several of these inter fund loans were neces-
sary. In other words, normal operating revenues were not in 2006-07, Vernonia’s Voice - Kline’s Q&A
PO Box 55
and will not be in 2007-08, sufficient to cover operating expenditures in Vernonia, OR 97064
several funds. And the inter fund loans must still be repaid, including - or -
interest, within two years! Therefore, every possible means of reducing Email firstname.lastname@example.org with the subject “Kline’s Q and A”.
expenditures must be utilized. We have dramatically reduced city admin-
istrative staff. Currently Joann Glass and I are juggling the work once