A Case Study in Budgetary Ethics
Learning Objectives:
√ To sharpen critical thinking skills by examining a real-life inspired case study.
√ To expose you to the numerous and complex issues that result from unethical decision-making.
√ To introduce you to the subtle differences between illegal and unethical decisions.
√ To develop a course of action that provides a road map to addressing the problems caused by unethical decisions.
Background
Copper Springs is a scenic and picturesque city of approximately 190,000 people. It is located 30 minutes north of Big Town, a more densely popu- lated city that has nearly one million residents.
The residents of Cop- per Springs enjoy its relative tranquility, sprawling landscapes, and the residential suburban feel. With its close proximity to the neighboring metropolis, it is an easy commute to regional employers. For the past several years Copper Springs has seen a steady increase in the numbe of new residents who are looking to get away from the hustle and bustle of big city life. The economic conditions in Copper Springs have traditionally been favorable. Even after the recent downturn in the economy, the city did not have to resort to any departmental contractions or layoffs. In fact, annual city revenues averaged a three percent increase over the past five years.
Copper Springs uses a strong mayor-council form of government. The mayor is elected separately from the council and serves as the chief executive officer in overseeing daily administrative operations. Contingent upon council confirmation, the position appoints and removes depart- ment heads. While the council has legislative power, the mayor has veto power. Nathan Turnicott is the new mayor of Copper Springs starting histhird year in office and planning to run for re-election.
He formerly worked in the Big Town City Attorney’s Office as a Chief Deputy City Attorney. He earned notoriety for winning several high profile cases involving shady land development issues where ties to an organized crime syndicate were suspected. Turnicott was known to be tough, a straight- shooter, and having a “no holds barred” approach. He succeeded the very popular Eldwin Archer who served for four terms. The personable and charismatic Archer likely would have run for re-election had it not been for new state legislation establishing term limits for mayors. Although not a native to Copper Springs, most residents felt as if Turnicott was aptly suited to succeed Archer and manage their city.
One of the main initiatives Mayor Turnicott undertook in his first year was the development and implementation of a performance man- agement system to help the city run more efficiently. Following the success of the Office of Performance Management within Big Town, he championed the creation of a similar unit in Copper Springs.
Primarily relying upon approximately a one million dollar increase in sales tax revenue from the previous year, Mayor Turnicott had the necessary funds to create a new governmental unit. Approved by a slim majority from the city council, Copper Springs created the Office of Performance Improvement (OPI). The objectives of the OPI in Copper Springs are to improve governmental accountability, enhance transparency, and facilitate strong citizen participation.
Furthermore, the mayor is a big proponent of technology and using data to inform decision-making. He strongly believes that an office like OPI will be seen as a “hallmark” for the city. Ultimately, Mayor Turnicott would like to implement a performance-based budgeting system to help the city run more efficiently.
The new office has a staff of seven that includes a director, one assistant director, four administrative analysts and one administrative assistant. The new office space for OPI, staff salaries and benefits, along with the necessary computer and office equipment, has cost the city nearly $900,000. Included in budgetary expenditures of OPI is a state of the art website that allows residents to view and conduct queries of performance data online. While $900,000 only represents about .3% of Copper Springs’ current annual budget of roughly $304,000,000, it represents 1.25% of the city’s discretionary $71,744,000 general fund.
Some city council members are concerned because OPI’s operating expenses are likely to continue to increase and there is no guarantee that it will save the city money in the future. One member of the city council who op- posed the creation of OPI said that the money should be put to better use, while another stated that the new mayor was “raiding the coffers for something that may, or may not be effective.” Ultimately, Turnicott aims for the city to move to a performance budgeting system and he believes that the return on investment from the initial cost of OPI will prove to be beneficial in just a few short years. As he sees it, “We need to invest in our future now and the best time to save money, is when you have money.”
While the population has continued to increase in Copper Springs, the number of sworn police officers has slightly decreased. Now officers are asked to work longer hours to cover the community effectively. Near- ly all officers are willing to work overtime because of the extra pay. How- ever, extending officer shifts introduces certain problems such as officer fatigue. Another related issue is the increased use of sick time which further depletes the police department’s limited resources.
Additionally, the police department is in need of new safety equipment, radios and video cameras for patrol staff. As these issues continue to grow within the police department there has been a simultaneous increase in crime. Most city managers and even some astute citizens seem to believe that the ratio of growing population to officers is out of whack and a reason for concern in Copper Springs.
Recently, one of the administrative analysts within OPI was ana- lyzing data from the police department. She noticed that 911 response times to crimes have significantly increased over the past three months from four minutes, ten seconds to more than seven minutes.
The Data Submittal Form signed by the police chief notes that “due to a decline in personnel, 911 response times have slightly increased.” She raises her concerns with the assistant director because, in her opinion, the increase in 911 response times is not slight. The assistant director discusses the issue with the director of OPI and she immediately contacts mayor Turnicott. Mayor Turnicott states “This is interesting. Let’s see what hap- pens next month. It could be an aberration.” The director tells her staff to monitor the situation closely for another month to see how the situa- tion plays out.
The following month 911 response times have increased again, from over seven minutes to nearly 10 minutes. The director of OPI once again contacts the mayor to relay the bad news. The news grabs the mayor’s attention as he struggles with mixed feelings. On the one hand, this could be considered as good news.
This data validates the importance of performance indicators and the wisdom behind creating OPI to monitor performance data independently as it is reported. Without OPI, this in- crease in 911 response times may have gone unnoticed for months or not reviewed until budgets are compiled again. On the other hand, Mayor Turnicott is upset. Not only has he no explanation for the problem, he knows that once the residents notice the spike, he will be held partially responsible. He contacts the chief of police with whom he has a good relationship and asks why there is an increase in 911 response times.
The police chief is aware of the increase in response times and simply states, “The department needs more officers.” Mayor Turnicott tells the chief he’ll do what he can, but there is no money in the budget to hire more officers this year. Mayor Turnicott also knows that there may not be money in next year’s budget because OPI continues to drain city resources. Furthermore, the mayor knows that if he reduces OPI staff, or eliminates it altogether, his innovative initiative will look like a failure and, undoubtedly, this could have a major negative impact on his bid for re-election. The mayor is hesitant to wait another month to see what the police data will show. He sets up a meeting with the director of OPI and “suggests” that it would be “really great” to “come up” with some “data or report” that would show how much the performance of the city administration has improved since the OPI started its operations. The mayor even has a number in mind.
He believes that the report should show at least $1,000,000 in savings. After noticing the director’s quizzical look, the mayor tells her that 911 response times “must” decrease next month. The director says that she cannot simply make the numbers go down, but the mayor insists. “If they do not go down, you’ll be looking for another job.”
The director is now clearly worried. She did not accept this position to be bullied or to manipulate data. She wants to present accurate and authentic data but she also wants to keep her job.
Begrudgingly she secretly tells the administrative analyst who monitors the police department’s data to make the response rate numbers go down. She also reflects on the differences between illegal and unethical actions. Legal actions deal with what is permitted or authorized by law while illegal are those actions that are prohibited by law. Ethical refers to judgments about right and wrong guided by principles. She decides to review the International City/County Manager Association’s (ICMA) Code of Ethics which she finds on the ICMA website (http://icma.org/en/icma/home). Additionally, she will seek the city attorney’s advice regarding legal provisions related to collection and dissemination of departmental performance data.
When the following month’s police data are made available on OPIs website, the police chief notices that 911 response times have surprisingly decreased. He realizes that this information is incorrect because of the Data Submittal Form he previously signed. He also knows that it is impossible because of the increased number of complaints he has received from citizens regarding the length of time it takes officers to arrive at a scene. Despite what he knows, he does not rock the boat by contacting OPI or the mayor.
Mayor Turnicott also has received complaints regarding 911 response times and he directs those to the OPI website where, after a brief spike,police response times have decreased. During this time, a woman is severely beaten by her boyfriend and nearly dies as a result of her injuries.
Neighbors say that it took the police at least 15 minutes to respond to the initial 911 call. In an effort to defuse the situation, the mayor decides to begin commenting on the Copper Spring’s social media websites. Using a pseudonym, he writes several messages and posts pictures that offer positive commentary about Copper Springs city government. He focuses the majority of his posts on the police department and how good of a job they are doing, in particular the time it takes them to respond to crimes.
The administrative analyst from OPI who had been told to manipulate the police data surmises that the true authorship of the social media messages and pictures are fictitious. She also feels really bad about the case of the battered woman. She dreads saying anything to the director of OPI because of the instructions she was previously given. The analyst cannot be fired as an at-will employer. Yet she fears not following direction will impact her next employee performance evaluation, places the director in a difficult position, and could jeopardize future funding of the continuation of OPI. However, she has decided to decline to manipulate the police data to make it appear more favorable. She will tell the director in writing that she declines to change the police data and leaves the matter to the director for resolution.
Assignment
After carefully reading the case study, answer the questions that follow.
Your instructor will indicate whether you should work individually or in groups. While you will be able to derive the answers to some of the questions directly from the reading or the ICMA Code of Ethics, others will require critical thinking. You should note that since this is a case study several questions will not have “correct” answers.
Although there are common lessons that everyone can learn from this case, there also can be a diverse set of perspectives when it comes to ethical considerations in the public budgeting process.
Case Study Assignment Sheets
1. What are the ethical and budgetary developments leading to the issues or problems in the case?
Exercise 2 A Case Study in Budgetary Ethics
2. Who are the main internal and external stakeholders, and what are their respective interests?
3. Identify the organizational actors who have made questionable ethical decisions.
4. Which internal stakeholders need to make a decision about what they will do going forward?
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