Why does the Auditor’s Office need a new funding model?
Voters in 2017 overwhelmingly supported greater independence for the Auditor’s Office, and budget-setting is the remaining section of the Charter amendment they approved that needs to be implemented. Voters reaffirmed the importance of an independent Auditor’s Office that is free to hold the City accountable without fear of reprisal. It is in the public’s interest for the Commissioners and the Auditor to fund the Auditor’s Office in a way that respects its independence and fulfills City Council’s fiduciary responsibilities.
How does the funding model meet the will of voters?
The Charter says the Mayor and Council should consider the Auditor’s priorities and duties when considering the office’s budget. A framework is needed to implement how that will occur. The proposed funding model ensures the Auditor’s Office has access to the resources it needs to meet its Charter and Code obligations and provides enough flexibility to address priorities set by the elected Auditor. It allows Council to decide the total amount of funding allocated to the Auditor’s Office but not to control its spending priorities.
How would the model work?
The change from the current process is that the Auditor’s Office would have access to 1.5 percent of its base budget, called the Current Appropriation Level, if needed for the Auditor’s priorities. That percentage annually is less than $200,000. If the extra funding is not needed in any given year, the Auditor will notify Council and the City Budget Office as early in the budget process as possible that it is available to allocate elsewhere. The model would be in place for five years.
How would the Auditor’s Office’s know whether it needed the increase?
We developed a financial plan that captures projected revenues and expenditures over a five-year period. The proposed funding model is sustainable over the five-year horizon and forecasts not needing the 1.5 percent increase in two of the five years. In those years, the Auditor’s Office may draw from its Reserve Fund to cover any shortfall.
What is the Auditor’s Office Reserve Fund?
Council authorized the Auditor’s Office to retain and carry forward its annual underspending up to $500,000 when it approved one facet of the funding model last fiscal year. We are renewing the request for the remainder of the model to be approved this year, so the reserve fund and the proposed model can work in tandem to ensure stability for the Auditor’s Office budget.
What are some examples from the financial plan?
One priority is to add a performance auditor position in Year 2 to increase our capacity to perform the accountability work the public values. Portland invests less in auditing than Multnomah County and Metro as a percentage of its total budget and of its total number of employees. We did not get to audits of homeless services, 9-1-1 operations, inclusionary housing, or citywide asset management last year for lack of auditors to do the work.
A priority in Year 4 would be a position in Archives and Records Management to improve the City’s ability to make records available to the public and help staff an oral history program, planning for which is scheduled to begin this fiscal year. Implementing an oral history program is a step toward our equity goals. An oral component would enhance the archival and documentary resources available for the public to access and appreciate City history.
Why does the model cap the total increases at $550,000 by the end of the five years?
The cap reflects our confidence in our ability to manage expenditures within modest, intermittent increases in revenue and careful use of the Reserve Fund.
Does the Auditor’s Office foresee making requests that exceed the $550,000 cap?
Only if events occur outside of the model’s assumptions. For example, additional funding may be requested if the Auditor consents to new or expanded responsibilities through Code changes, when voter-approved Charter changes require new resources to implement, or in cases of sizable unanticipated expenditures, such as an emergency repair to the Portland Archives and Records Management facility.
How would a potential economic recession impact the funding model?
The City Auditor would work with Council on a mechanism to adjust the model in the event of a fiscal emergency so that any budget reductions would be consistent with those applied to all elected offices.
Why is the model only used for five years?
Five years gives the Auditor’s Office and City Council an opportunity to test the approach before fully implementing the funding model. A former City Budget Office Director recommended five years as an appropriate time period to test the durability of the model.
What happens at the end of the five-year period?
The City Auditor will meet with the Mayor and Council to determine whether to fully implement the funding model based on how it performs. At that point, Council will need to approve ongoing funding to protect any permanent personnel appointments made during the five-year trial period.