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Reading the Fine Print

I’m not sure how many copies of Arlington County’s annual financial statements (formerly known as the Comprehensive Annual Financial Report, or simply the CAFR) that are mailed to citizens each year, but whatever the number, it may not be enough. Taxpayers who have not seen a CAFR can take a look at one online at the Department of Management & Finance’s website.

There is a lot of information in the CAFR, and as a pundit might say, “the devil is in the detail.” And real detail are the “notes” to the financial statements. For example, Note 2, Legal Compliance, on page 66 includes the fact that spending is controlled at the department level, but five departments in FY 2007 “exceeded the level of control,” i.e., they spent more than was budgeted. The last sentence in the second paragraph each year provides that “Management will ensure these departments develop better budget estimates in future years.”

That would be all fine and dandy if that was a “one-time” occurrence. A look through Note 2 in the most recent five CAFRs shows that county management is not doing a very good job at “ensuring development of better budgets.” Several departments seem to overspend their budgets every fiscal year (number in parentheses is the number of times over-budget in the last five years):

  • Commissioner of Revenue - 2005
  • County Attorney (3) - 2004 + 2005 + 2006 + 2007
  • County Board Office (2) - 2004 + 2007
  • County Manager Office - 2004
  • Department of Public Works - 2003
  • Electoral Board (3) - 2003 + 2004 + 2005
  • Fire Department (3) - 2005 + 2006 + 2007
  • Human Resources (Personnel) - 2004
  • Management & Finance - 2003
  • Office of Support Services - 2003
  • Parks, Recreation and Cultural Affairs - 2007
  • Sheriff (5) - 2003 + 2004 + 2005 + 2006 + 2007
  • Treasurer (2) - 2003 + 2004

Exhibit 5 on pages 50 and 51 compares budget and actual amounts for each department for FY 2007. Below are the “final” budget, actual, and “variance” for each of the five department (in $1,000) that exceeded their budgets in FY 2007:

                                     Budget         Actual        Variance

County Board             $    882     $     918        <$   36>
County Attorney         $  1,673     $  2,105        <$  432>
Sheriff                         $31,822     $32,845        <$1,023>
Fire                              $40,468     $41,312        <$   844>
Parks, Rec & CA          $32,077     $32,147        <$    70>

Don’t you wish you could run your family finances like the county does? And, oh, by the way, while management has an opportunity to explain why these five departments were unable to control their urge to splurge in a required section called “management discussion and analysis” (pages 30-39, FY 2007 CAFR), they simply refer readers to Exhibit 5. And why hasn't the Sheriff been able to learn those better budgeting techniques? Inquiring minds, however, would like an explanation.

UPDATE (8/27/08): Variances corrected by +/1). 

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