TPPF Releases Analysis of Smith County Government

Tyler – The Texas Public Policy Foundation (TPPF) today released its findings of Smith County Government after nine months of research. The Smith County Opportunity Analysis identifies waste along with suggestions for improving the performance of county government which will save taxpayers $27.2 million over the coming decade.

“Smith County is a growing and vibrant community with a bright future. Unfortunately, Smith County government is not modernizing its management and information systems to fulfill its core functions. In contrast with your city government, Smith County is lacking innovation, efficiency, and planning which threatens its economic future,” said Johnny Lovejoy, Research Fellow with the Texas Public Policy Foundation and who conducted the study.

The Texas Public Policy Foundation is a non-profit research institute founded in 1989 that conducts research on state and local issues and disseminates the findings to elected officials, opinion leaders, the media and the public. TPPF accepts no government funds and conducts no contract research. All TPPF research is consistent with the principles of limited government, free enterprise, private property rights and individual responsibility.

Some of the key findings of the report include:

• The keys to efficient Smith County government can be found in better accounting systems, benchmarking government costs with the most efficient producers in government and non-government sectors, and by applying competition to as much of government as possible to reduce costs to the lowest cost determined by the market.
• The Opportunity Analysis reviewed 67% of the County budget ($24.8 million of a $37.2 million budget). Expenditures by Smith County have increased 20.4% since FY 97/98. Contributing to this increase have been the following operations within Smith County:
  • Public Safety/juvenile boot camp 61.4% increase
  • Public Safety/juvenile probation 57.5% increase
  • Administrative/general operations 51.3% increase
  • Health and Welfare/public service operations 39.5% increase
  • Road and Bridge/labor and material 21.9% increase
  • Administrative/tax collector/assessor 21.8% increase
  • Public Safety/sheriff’s department 21.2% increase
  • Public Safety/jail operations 18.3% increase
  • Judicial/criminal district attorney 16.8% increase
• Since 1990, the Smith County population has increased 14.6% and growth is expected to increase 25% by 2010.

Information Technology

• Smith County has serious problems with regard to modernizing its records management, data collection and information technology systems. If not addressed, the poor state of information technology in Smith County will cause greater and greater disruptions in future years as demands on County government grow.
• The Information Technology (IT) efforts of Smith County offer a good case study of how not to outsource government activities. The IT experience shows a lack of competition with inordinate cost escalation resulting, a lack of internal controls on the contractor, and management without a clear and concise plan for implementation. For instance, for nearly three years and at a direct cost of $2.8 million, Smith County’s IT contractor has attempted unsuccessfully to bring Smith County on-line and operational with the Collin County Judicial Management and Database computer program. Despite being ten to fifteen months overdue with seven of nineteen specified tasks and deliverables on a county-approved timeline, the IT contractor was granted a 25 percent increase in its monthly fee rather than a ten percent penalty for non-performance as laid forth in the contract with the county. Over $7.6 million has been paid to the County’s IT contractor since 1993.
• Smith County government, as a whole, lacks proper methods for the efficient dissemination, gathering, storage and retrieval of documents, data, and public information. Smith County officials violate the letter and spirit of the state’s Public Information Act as a result.
• Due to the poor state of information technology in Smith County combined with poor accounting systems and performance measures, vital information for this report was often unavailable – information that would reveal internal costs and inefficiencies.
• The Smith County Appraisal District (SCAD) has been attempting unsuccessfully over the past three years to collect data from the County Clerk’s office which is necessary to appraise the proper value of real property subject to tax within the County.

Law Enforcement

• The Sheriff’s records management system is unsatisfactory and is incapable of providing jail safety information.
• The Sheriff’s Department, District Attorney, and Judges are unable to adequately track inmate incarceration.
• Smith County jail operations are too costly and should be competitively priced which would yield estimate savings of $4.418 million over the next ten years.
• By eliminating unwarranted duplication between the Sheriff and the Constable law enforcement departments, Smith County could save an estimated $6.415 million over a ten-year period while increasing revenues from services to offset future increases in costs.
• The Sheriff Department’s performance in the area of civil processing is below standards. The Smith County Sheriff’s department, on average, serves only ten of the twenty processes received each day. Civil process data encompassing the years 1995 through 1998 were requested for this analysis by TPPF in 1999. The Sheriff’s department could not locate roughly 50% of the data over the four-year requested period pointing to another reason for better information management. Criminal process administration should be completely contracted intergovernmentally to one of the County’s law enforcement agencies through a competitive bidding process. Initiating competitive processes in this area could save an estimated $3.835 million over a ten year period.

Additional Issues

• As has been done effectively by the City of Tyler, the Smith County Road and Bridge Department needs to embrace public/private competition to contain and reduce costs.
• Smith County is losing interest on tax and fee revenues because deposits are not being made in a timely manner.
• To date, the County has apparently ignored or dismissed essentially all of the Texas Comptroller of Public Accounts’ recommendations for cost savings within Smith County, with the exception of outsourcing one mile of road repair. Furthermore, no timelines or deliverables were established for implementation of the issues raised. Had these recommendations been implemented, Smith County taxpayers would be saving an estimated $350,000 – $400,000 per year.
• Throughout the research for this report, it became apparent that there is inadequate tracking of internal costs in Smith County government. Government officials can hardly make their operations more efficient if they cannot first identify inefficiencies. TPPF recommends that Smith County immediately implement Activity Based Cost Accounting (ABC) and Activity
• Based Budgeting systems. ABC captures all of the direct and indirect costs of each government service and activity yielding better cost data and allowing comparisons to be made with other governments and the private sector. ABC has been used for many years in the private sector and is being implemented in Texas state agencies.
• Smith County Commissioners Court should implement Activity Based Budgeting which would end the practice of funding budget requests of independent departments without an understanding of the competitive market cost of the services of those departments. Commissioners Court should end the practice of funding the budgets of independent departments and instead start Abuying services at a market-determined rate on behalf of all Smith County taxpayers.
• Cumulative cost savings attendant to the recommendations identified in this report are summarized in the table below.

SUMMARY OF OPPORTUNITIES TEN-YEAR COST SAVINGS TO SMITH COUNTY TAXPAYERS Recommendation Ten-year Savings Upon Implementation* ($) 1. Strategic Planning/Information Technology and Records Management $3,000,000 2. Information Technology Performance Measures $1,410,000 3. Sheriff Department – Records Management $460,000 4. Inmate Incarceration Tracking System TBD** 5. PIA/Records Management Overhaul TBD** 6. Jail Operations – Competitive Bidding $740,000 7. Blue Warrant Reimbursements $4,453,000 8. Eliminating Sheriff-Constable Duplication $6,415,000 9. Improved Civil/Criminal Processing $7,835,000 10. Automated Constable Operations TBD** 11. Road and Bridge Competitive Outsourcing $2,930,000 12. Improved Receivables Management TBD** Total $27,243,000 * Ten-year savings do not include additional savings from implementation of activity-based cost accounting systems; do not include non-overlapping savings from the 1998 Comptrollers Report; and do not account for annual inflationary rate adjustments. ** Insufficient data provided by the Smith County officials to TPPF to assess savings to Smith County taxpayers.