ND Budget Cuts Illustrate The Absurdity of Government Accounting February 25th, 2016 Only in government can you save $3.5 million by not filling job

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ND Budget Cuts Illustrate The Absurdity of Government Accounting

February 25th, 2016

Only in government can you save $3.5 million by not filling jobs that were already empty.


With the mandatory cuts ordered by the governor a few weeks ago due to the billion dollar budget shortfall caused by years of over-spending by Republicans. agencies are making the cuts in ways that will be felt by the public in unnecessarily painful ways.

These cuts are illustrating two facts about government accounting:

1.) Government's definition a cut is not the same as a normal business person's definition of a cut.

2.) When government agencies are required to make cuts, they will do it in the most painful and public way possible - rather than making the cuts in areas that are not mission critical.

Cutting Money That Wasn't Being Spent

Many people know that the government uses its own system of accounting called "fund accounting" - which is different than what most businesses use which is called "accrual accounting".

The reason government uses "fund accounting" is because it is easier to manipulate and play shell games with.

Today's case in point is the North Dakota Department of Transportation.

According to the Fargo Forum:

Holding 20 full-time positions vacant will save the DOT about $3.5 million, and the agency will reduce the budget for temporary employees by $1.4 million, Levi said.

In other words, there are and have been 20 full-time positions that NDDOT has not filled - and they will save $3.5 million by continuing to not fill those positions.

Fuzzy math? Yes.

These have been called "phantom FTEs" by conservative legislators in the past, and there have been efforts in the past to reduce the practice.

Beyond that, the Forum article also grazes over another under the radar issue that has been plaguing North Dakota state government for a long time

There has been a practice for many years to hide the true growth of the state government bureaucracy.

2003-2015 FTEs

Since 2003, the number Full-Time Permanent positions in state government (excluding higher education) have grown from 8,386 in 2003 to 9,391 in the 2015-17 budget - a 12% increase.

But those numbers don't show the whole picture. It has become common practice to hire state employees and call them Temporary Positions, even if they are employed for years on end.

The NDDOT has been documented as one of the state agencies that utilizes this approach to an extreme.

This approach is deceptive on both the front and back end.

On the front end, it hides the true growth of government and the bulking of the bureaucracy - something conservatives and Republicans should oppose.

On the back end, it hides the true impact of cuts on the previously bloated and unsustainable growth - something liberals and Democrats should oppose.

By hiding the true growth of government, and using a staffing technique that leads employees to think that the the word "temporary" is just a label for accounting purposes, it puts the employees themselves in a bad situation when it is time to make cuts.

From the Fargo Forum:

The DOT has about 85 temporary employees in addition to its 1,050 regular employees, but Levi said he couldn't provide specifics on how many were being laid off, as some of those decisions have yet to be made.

"We had to tell some of them we no longer needed their services," he said, adding they were "difficult conversations."

Joey Roberson-Kitzman said he was told last Thursday by his manager in the DOT's Environmental and Transportation Services Division that his temporary position would be eliminated March 4 — the same day he was scheduled to close on the purchase of his first home.

"I was just in shock," he said. "You don't expect to pretty much lose a house before you have it because your stable job goes away."

Hired in May 2014 as an administrative officer II, the divorced father of two said he was previously told his 40 hours a week may be reduced but he now knows of at least three other DOT temporary employees losing their jobs to the budget cuts.

The state simply should not have been leading its employees on about how stable their jobs might be. Calling an employee "temporary" but keeping them on staff for nearly two years is simply not an ethical way to do business or treat your employees - government or private sector.

When compared to the laws that govern the private sector, this is like a business that keeps someone who is really an employee listed as an independent contractor for years on end.

It is just another case of the government not playing by the same rules and ethics it requires of the private sector.

It's no wonder NDDOT has been declared to be a hostile work environment by the state's own Human Resources Management.

These lay-offs certainly must have come as a surprise to those who read the Bismarck Tribune:

No reductions in the number of state employees will be made as a result of budget cuts, but some families across the state will be impacted by cuts to human services programs.

Intentionally Making Cuts Painful

General Fund Budget Increases

From 2003 to 2015, the state general fund spending has increased from $1.8 billion to $6 billion - an increase of 233% in 12 years.

Knowing that, most people would think that a 4.05% decrease would not be all that painful after a 233% increase.

But that's not how government agency heads think. Instead of minimizing the impact of a relatively small reduction - they like to maximize the pain to the public so that the very people the agency is supposed to help feel it the most.

Case in point:

While the Department of Human Services is busy defending itself from criminal accusations of cover-ups, they are also making sure that the budget cuts required of them impact the very people they are supposed to be helping.

From the Fargo Forum:

Letters went out Wednesday to about 500 families who will lose their eligibility for the child-care assistance program on April 1 in a change estimated to save DHS about $5 million, Anderson said.

Lawmakers in 2013 expanded the eligibility from 50 percent to 85 percent of the state’s median income, but that will now be adjusted back to 60 percent, Anderson said. The average monthly cost per child has been $370 since the current biennium began July 1.

Nursing homes are also worried about Human Services cuts - because apparently they can find no other bloat in a $3.5 billion budget to cut. #sarcasm

This approach to making cuts that the public sees rather than behind the scenes is very much like the tactics used in the federal government by Democrats to make Republicans look bad during the government shutdowns.

But let's just keep building Taj Mahal style buildings for the state bank - no one will notice!

Next Round Of Cuts Will Be Worse

This week, Whiting Petroleum announced that it would be ceasing its operations in North Dakota. As the largest player in the Bakken by daily oil production, this suspension of activities should be viewed as a signal of things to come.

The number of active rigs in North Dakota is down to 39 already, which is worse than even the most pessimistic predictions last spring.

Things are only going to get worse in the short-term, and the 2017 legislative session is going to be a real mess.

Moodys will be coming back to North Dakota once the full 1st half of the 2015-17 biennium is completed, but Moodys is already declaring the state is in a recession.

There will likely need to be another round of cuts prior to the 2017 session.

North Dakota will thrive despite what is happening in government, but the fact is: the biggest problems are in government - despite what some might think.


-Dustin Gawrylow, Managing Director

North Dakota Watchdog Network

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