Re: SA2003RF0034, a California Initiative

You and your staff are working hard to have the fiscal impact study on the above initiative completed by September 10th. I would like to make a few points regarding the costs to the state of this initiative, which I believe will be small.

1. Reduction of waste
Any costs incurred in implementing the posting of government finances to the Web will be more than offset by savings made. Posting the finances, which will allow public scrutiny of government accounting, will reduce waste and corruption. Such things flourish when business is conducted in secret and books are closed to the public. Knowing that all their transactions will be posted to the Web within 24 hours will surely rein in those individuals or departments that are careless, slipshod, wasteful or downright corrupt.

Additionally, the implementing of this measure will stop the unnecessary spending boost that always occurs around the close of the fiscal year. I refer to the common practice whereby departments artificially inflate their spending in the hope of landing themselves a bigger budget for the following year. This is bad policy and bad financial management. It is only one of the creative financial "tricks" that would soon be exposed by posting the finances to the Web.

I am sure you will factor these considerations into your estimate of costs to the state. I believe that savings will be considerable, although of course it is hard to put an exact figure on them. My guess is that the magnitude of savings will surprise many people.

2. Accounting software
The accounting software that will initially be required is a program that will convert electronic accounting data into simple checkbook register form; showing date, check number, payee, payment or deposit, and ongoing balance.

The program would also be able to archive revenues and expenditures for previous days, in such a way that each day's finances could be easily accessed, like an online newspaper archive. The program would also have the capability of producing graphs, and reports such as Budget vs. Actual, By Vendor, Profit/Loss, and so forth.

Developing such a program is not a large task for manufacturers of accounting software. And given the fact that there are a number of different accounting software programs in use by governments throughout the state, there will be a number of software manufacturers willing to create a program that will do the job. In such a competitive environment, costs to the state are likely to below.

It is also quite possible that several software companies might be willing to work with the State of California without charge because they will realize that other cities, counties, and states will eventually adopt the new software program as well. It will be a good investment opportunity for them.

I do acknowledge your concerns about the number of different accounting software programs currently in use, and agree that eventually it would be advantageous to standardize such programs throughout the state of California. But that is by no means necessary for the successful implementation of this initiative.

In light of these points, I estimate the fiscal impact of developing the software should be minimal to the state.

3. Staffing levels
Although I understand your concerns that this initiative, which will require state employees to update government Web sites daily, will increase staffing needs, I believe such increases will be minimal or even nil. Since accounting data is already entered in electronic form, it will require only a few minutes of the same clerk's time to upload the data via ftp to the relevant Web site. Training required for each employee would be minimal.

4. 120-day implementation
I understand that you may also be concerned about the requirement that the program be implemented within 120 days of the initiative passing. I assure you this is possible. At first, the system would be a fairly simple one. But I envision this project evolving over time. Initially, it may be more like, say, a Ford Focus than a Cadillac Escalade, but refinements and improvements can be made over time, as software development permits.

Finally, please allow me, as the proponent of this initiative,to make some brief comments about why I believe it is in the best interests of California. Put very simply, it is just common sense. Since California is the fifth largest economy in the world, it is imperative for it to have a sound and responsible fiscal system.

The excuses one sometimes hears along the lines of "Well, it's the government, what do you expect?" will not do at all.

A government should be as efficient, as waste-free, and as honest, as the best-run corporation. Multinational conglomerates based in the United States, such as Procter & Gamble, 3M, and Coca-Cola, must and do maintain a "money trail" for all of their goods and services.

The financial affairs of the state of California should resemble companies such as these, rather than the Enrons and Worldcoms of the world. I believe that the Post the Finances initiative is a significant contribution to taking California in this desirabledirection.

Bearing all these points in mind, I respectfully request that the fiscal impact study you are preparing should favor a conservative approach to any estimation of costs. As I have explained, I believe the savings made over even the first year will far outweigh the modest costs involved in setting the system up.

Sincerely,

Steve Mozena