Agenda 04/14/2009 Item #10E
Agenda Item No.1 OE
April 14, 2009
Page 1 of 8
EXECUTIVE SUMMARY
Reeommendation to Approve tbe Report and Recommendations of tbe Productivity
Committee Relating to tbeir Study and Evaluation oftbe Methodology, Reasonableness,
and Competitiveness oftbe Invoices Received from the Clerk
OBJECTIVE: To approve the report and findings of the Productivity Committee and to direct staff
to carry out the recommendations outlined in the report.
CONSIDERATIONS: On Janwuy 13, 2009, the Board of County Commissioners approved the
recommendations outlined in the Executive Summary of agenda item 10-G (attached), which included
the following: "Task the County Productivity CommiUee to review the methodology used in the
development of these charges from a business perspective and to evaluate the reasonableness and
competitiveness of these proposed charges. "
The Productivity Committee formed a Subcommittee consisting of Steve Harrison (Chainnan), Brad
Boaz, Doug Fee, and Jim Gibson. Staff representing the County and the Clerk also attended and
participated in discussions. The Subcommittee held three public meetings, and on March 18, 2009
presented their findings to the full Productivity Committee. During that Productivity Committee
meeting on Marchl8, 2009, the Productivity Committee offered the Clerk's Office an opportunity to
provide a response to the Productivity Committee's findings. The Productivity Committee authorized
Chainnan Steve Harrison to revise the Productivity Committee's report if he deems appropriate, based
on the submitted response from the Clerk's Office. In an email to the Clerk's Finance Director Crystal
Kinzel, Mr. Harrison set a suspense date of April I, 2009 for the Clerk's response, in order to have this
item placed on the agenda for the April 14, 2009 Board of County Commissioners meeting. On April
1,2009, when no response had been received from the Clerk's Office, Steve Harrison asked the staff
liaison to the Productivity Committee to place this item on the agenda for the April 14, 2009 Board of
County Commissioners meeting.
FISCAL IMPACT: Based on preliminary staffreview, it is estimated that implementation of any or
all of the recommended actions may result in savings to the BCC of up to approximately $2,000,000
depending upon the outcomes of process improvements, outsourcing, or reducing services.
GROWTH MANAGEMENT IMPACT: There is no Growth Management impact associated with
this Executive Summary.
RECOMMENDATION: That the Board of County Commissioners approve the report and findings
of the Productivity Committee (attached), and direct staff to develop and bring back to the Board a
plan to carry out the recommendations outlined in the report. It is further recommeuded that the Board
direct the County Attorney to work with staff in the drafting of an inter-local service agreement as
recommended by the Productivity Committee in the report.
AlTACHMENTS: Marchi 8, 2009 FindingslRecommendations of the Productivity Committee
Janwuy 13,2009 Agenda Item lOG Executive Summary
PREP ADD BY: Mike Sheffield, Assistant to the County Manager
Page ] of I
Agenda Item NO.1 OE
April 14, 2009
Page 2 of 8
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
Item Number:
Item Summary:
10E
Recommendation to approve the Report and Recommendations of the Productivity
Committee relating to their study and evaluation of the methodology, reasonableness, and
competitiveness of the invoices received from the Clerk (Len Price. Administrative Services
Administrator)
Meeting Date:
4/14/200990000 AM
Approved By
Leo E. Ochs, Jr.
Board of County
Commissioners
Deputy County Manager
Date
County Manager's Office
4/712009 4:44 PM
3/18/2009
Agenda Item NO.1 OE
April 14, 2009
Page 3 of 8
COLLIER COUNTY PRODUCTIVITY COMMITTEE
FINDINGSANO RECOMMENOATIONS OF SUB-COMMITTEE
RELATING TO THE CLERK OF COURTS INVOICES TO THE BCC
BACKGROUND
At their January Meeting, the Collier County Board of Commissioners asked the Productivity
Committee"... to review the methodology used in the development of these (Clerk of Court)
charges from a business perspective and to evaluate the reasonableness and competitiveness
of the(se) proposed charges..." The Sub-Committee views this request as three separate
questions:
1. What is the methodology?
2. Are the proposed charges reasonable?
3. Are the proposed charges competitive?
Subsequent to this request by the Board of County Commissioners, a Florida Court has ruled
that the anticipated $20.7 million in interest on County funds is income to the Clerk.
As shown in the attached recap of the Clerks 2009 budget for fund 011 reflects expected
charges against the above interest of approximately $5.4 million in FY 09, net of miscellaneous
fees and a $13.7 rebate to the Board of County Commissioners.
METHODOLOGY
The Clerk's invoices reflect a fairly comprehensive inventory of services provided to the BCC as
well as lump sum charges for the recording of official records and the BCC's share of MIS
expenses. The services itemized include statutory and non-statutory services the largest of
which are Payroll and MIS.
According to Crystal Kinzel "tally sheets" are maintained as the basis for all transactions and
documents certified by the Clerk. Florida Statute specifies that the Clerk shall be compensated
at the rate of up to $7 for each transaction processed. The Statute is silent if this rate applies
equally to non-statutory transactions as well as statutory transactions and if tally sheets are an
acceptable method for accounting for transactions. Further. the Statute appears to compensate
the Clerk for services rendered to the Board absent access to a significant volume of interest
income.
(
1
3/18/2009
Agenda Item NO.1 OE
April 14, 2009
Page 4 of 8
REASONABLENESS
The attached recap annualizes the October-December invoices while crudely grouping the
underlying transactions as either required by the Statute or not required by the Statute.
The statutory charges appear reasonable at an annual level of $2.4 million considering that
Collier County is a $1 billion enterprise. However, two areas may offer opportunities to reduce
the cost to taxpayers: (1) Using electronic media to record discussions at public meetings rather
than verbatim transcription and publishing of proceedings and, (2) using more electronics in
accounts payable/cash disbursements and/or outsourcing those portions of the processing not
impinging the Clerk's pre-audit responsibility.
In the case of Accounts Payable, every invoice is checked against the account to which it is
being charged and any underlying contract for legality and sufficiency of funds. The Statute
does not define the level of pre-audit deemed to be sufficient to insure against misappropriation
of funds.
COMPETITIVENESS
The attached recap suggests that non-statutory services are approximately $1.8 million
annually. These services have inured to the Clerk over the past 20 plus years usually at the
request of, or with the permission of, the Board of Commissioners. The scope of work done and
the fee for such work is not now the subject of any inter-local agreement nor is it reviewed with
the Board on a periodic basis with an eye toward its cost effectiveness
Theoretically, the Board could absorb or outsource any services now performed by the Clerk
that it could establish to be outside the statutory authority of the Clerk. However, to do so the
Board should confirm that any such alternative(s) result in lower costs to the taxpayers and that
the existing costs within the Clerk's Office will be reduced.
Clarification is needed to confirm those services falling outside the Clerk's statutory authority to
determine items now performed by the Clerk that might be performed by the BCC or a third
party. Specifically,
1. Payroll processing including the preparation of checks, pay stubs, W-2s, withholding tax
accounting and reporting. Time and attendance records are already processed and
approved for payment by various BCC Departments. An outside service bureau could
make the payments, handle the withholding tax payments and reporting, and prepare
payroll records for the Clerk to post to the accounting records.
2. Accounts Payable vouching including the coding to specific budget line items by an
outside service organization and subsequent presentation to the Clerk for pre-audit and
payment.
3. Investment management services now performed by the Clerk do not appear to be
required by his statutory duties as funds "custodian".
2
3/18/2009
Agenda Item No. 10E
April 14. 2009
Page 5 of 8
RECOMMENDATIONS
This Sub-Committee recognizes that the interpretation of the Florida Statute defining the Clerks
authority may be further refined by the State Courts and/or the Legislature. Nevertheless, we
offer the following recommendations:
1. Ask both the County and the Clerk to review and enter into separate inter-local service
agreements precisely defining services to be performed in four areas:
1. General Accounting and Reporting services
2. Accounts Payable Pre-Audit Services
3. Contract Auditing Services
4. MIS Services
Each agreement should describe the specific processes the Clerk will perform and the
resulting deliverables. The fees under each agreement should be fixed for the term of the
agreement and not based on a per transaction charge. We recommend that these
agreements be targeted for completion no later than June 30, 2009 and updated
annually.
2. BCC should consider the potential for reducing the cost of verbatim transcription of
official records to determine if audio and/or video records are legally sufficient and can
be accessed reasonably by the public, A document management system may be
needed to cross reference electronic records to published agendas, e mails and other
documents. (Large organizations are now doing this to comply with Sarbanes-Oxley
requirements)
3. We recommend that County staff and the Clerk's staff review the processes for accounts
payable vouching and payroll processing and reporting. The object of such review is to
improve the BCC's understanding of the processes, and for both parties to determine
any areas where efficiencies may be obtained. Subject to the outcome of this review,
the parties will include such items as necessary in the Interlocal service agreements and
determine other alternatives including outsources. We recommend that these reviews
and possible agreements be completed no later than June 30, 2009.
4. Investment Management services should be controlled by the BCC and provided by a
vendor of its Choosing. Such advice pertains to the significant funds owned by the BCC
and should be the subject of regular reporting directly to the BCC. The BCC should
specifically define the type and frequency of investment information it desires. Further.
the BCC should have direct access to the banks and investment companies holding
BCC funds.
3
3/18/2009
Agenda Item NO.1 DE
April 14, 2009
Page 6 of 8
5. Subject to the above renegotiations and review of the scope of services provided by the
Clerk, the BCC should make regular payments for service provided under the
agreements to the Clerk. Such payments should be retroactive to the beginning of
Fiscal 2009 and should commence in the month following the completion of the above
items.
6. Concurrent with the above, the Clerk should remit interest received on the BCC funds to
the BCC on a regular basis.
7. Reporting of the Clerk's expenses and reimbursements should be separated from
reporting of interest income and fees. In the event the Clerk's budget requires additional
funds, such amendment should be approved by the BCC. Further we recommend that
new revenue accounts be added to fund 011 to record the payments by the BCC under
.~"hl f""O~,' "~cnh. ,
Step~rrrson, airman
Sub-Committee for the Review of the Clerk's Invoices to the BCC
4
Agenda Item No. WE
April 14. 2009
Agenda Item~Jl'1&ff 8
EXECUTIVE SUMMARY January 13,2009
Page 1 of 11
Recommendation to defer approval of two invoices totaling $707,317.85 from the Clerk of Courtl
for "Services per statutory charges" provided to the Board of County Commissioners during the
Months of October and November, 2008.
OBJECTIVE: To defer approval of two invoices received from the Clerk of the Circuit Court for
"services per statutory charges" provided to the Board of County Commissioners (Board) during the
months of October and November, 2008, to direct the Clerk to provide additional supporting
documentation for the invoices and to provide additional direction as appropriate.
CONSIDERATIONS: The first invoice for $380,319.43, dated November 21, 2008, was received on
December 12,2008 in the Board Offices. The second invoice for $326,998.42, dated December 21, 2008,
was received on January 6, 2009, in the Board Offices. The transmittal letters were sent to the attention of
the Board Chairman. The invoices were forwarded to the Budget Office on January 7, 2009 and January
6,2009, respectively.
Both of the transmittal letters reference the inclusion of supporting documentation which is a highly
summarized schedule of transaction types, a number (count) of the transactions processed, and a unit
charge of $7.00 for each transaction processed. In addition, there are several charges such as Board
Minutes and Records, Investment Administration and MIS (Management Information Systems), that have'
a dollar amount but lack unit counts. Copies of the transmittal letters, invoices and supporting
documentation are attached.
There are two primary issues from a financial perspective. They are:
1. There is no adopted appropriationlbudget for these charges which will be several million dollars
on an annual basis.
2. Lack of detail in the supporting documentation, including a specific statutory citation which
authorizes these charges and a lack of understanding in the methodology used to develop them,
No adooted aODrooriationlbudl!et:
The Clerk represents one of the six Constitutional Offices charges with the administration of the public's
affairs in Collier County government. In the State Constitution and in the Florida Statutes, the Board is
defined as the highest unit of local government, which includes the responsibility for establishing the
annual County-wide budget; there is a well defined statutory budget process for the Board and the other
constitutional officers to follow in establishing the annual budget for the County. The Property Appraiser
and the Tax Collector participate in the budget process and provide their budgetary input as required
statutorily. The Sheriff and the Supervisor of Elections compete in the budgetary request for
funds/appropriations in the same manner as the County Manager's staff. The Clerk does not compete with
the Sheriff, Supervisor of Elections or County Manager staff for a reasonable share of Board
appropriations. Because of the Clerk's failure to participate in the Board's budgetary process, the Board
has not established appropriations for the last two budget cycles, beyond those required for the CleJ:k's
court operations.
Lack of detail:
The Board runs a billion dollar plus organization; it is a large business operation; it has established
detailed purchasing policies and procedures which are designed to acquire best value products and
services at a fair and reasonable competitive price. The prices in the attached invoices are standardized at
$7.00 a unit; regardless of the simplicity/complexity/duplicity of the action.
I
l
Agenda Item No.1 OE
April 14, 2009
. $ 0 . d. d d' bl' ds AQend~"nfiil!l.e,Mf 8
The unit pnce last year was 6.0 a transaction Iscovere unng a pu IC recor requ~~~
the unit price seems to be seventeen percent (17%) from one year to the next year. Page 2 of 11
The unit (transaction) price the Clerk is charging the Board can be as simple as answering a telephone ca.l1
from a County staffer, sending an e-mail response to a County staffer e-mail question, printing a report
from SAP or any of the numerous shadow systems maintained by the Clerk's Finance Department,
drafting and posting a journal (accounting) entry, posting a budget amendment to the accounting system.
sending a form letter to a vendor, etc., etc. Some of the unit transactions can be accomplished in seconds;
some will take minutes or longer for more complex unit transactions. There is no agreed upon price basis
or competitive measurement, such as the Board's purchasing policy would provide, for unit prices
associated with these financial transactions.
Regarding duplicity of effort, there are several steps identified to process an accounts payable or payroll-
transaction. The initial review of the highly summarized documentation attached to these invoices tends to
indicate that each step has a separate $7.00 charge.
There are strong indications these services can be acquired at a considerable cost saving if they go through
the Board's competitive acquisition process. The biggest unknown is identifying the cost associated with
the Clerk's pre-audit responsibilities.
GROWTH MANAGEMENT IMPACT: There is no growth management impact associated with this
action.
FISCAL IMPACT: The two invoices for services to the Board of County Commissioners during the
months of October and November, 2008 total $707,317.85.
RECOMMENDA nON: That the Board of County Commissioners:
1. Defer approval of the invoices received from the Clerk;
2. Direct the Clerk to provide pre-audit level supporting documentation for the invoices;
3. Task the County Productivity Committee to review the methodology used in the development of
these charges from a business perspective and to evaluate the reasonableness and competitiveness
of these proposed charges; and
4. Have staffbring back to the Board upon successful review by the County Productivity Committee.
PREPARED BY: John Yonkosky, OMB Director