Treasurer-Tax Collector

Eric Sonquist


Mailing Address:

Post Office Box 579

Santa Barbara, CA 93102-0579

Telephone (805) 568-2490

FAX (805) 568-2488

June 23, 1995

The Honorable Rodney S. Melville

RE: Treasurer - Tax Collector's Response to the Santa Barbara County Grand Jury Interim Final Report on the Management of County Government.

Dear Judge Melville,

I have read and reviewed the report on the Management of County Government released on May 3, 1995. The cover sheet provided to our office indicated that I should respond to recommendation #3-a, #3-b and #7-c. Pursuant to this directive, the following is my response as required by Penal code Section 933c.

While I am pleased that the Grand Jury undertook this analysis, I am disappointed that the Grand Jury did not request the information related to items #3-a and #3-b from all department before issuing the report. Had they done so, 1 think you would have found that each independently elected official has adopted mission statements, department goals and objectives, and has a program in place to assess performance Certainly, that is the case in my office.

I am proud of my department achievements during my tenure as Treasurer - Tax Collector. We could not have accomplished any of our numerous major automation initiatives or programs successes without an effective strategic planning process, a clear mission statement, wellgrounded goals and objectives, and specific policies and procedures to support the realization of that vision.

To give you a clear picture of my approach I am enclosing the following documents for your review:

A. Mission Statement; Goals and Objectives; Policies and Procedures

1. Departmental Policies and Procedures Manual (11/94 edition. first produced in

This is an all encompassing manual covering each division within the department and addresses departmental and programmatic functional descriptions, mission statements, goals and objectives.

2. Departmental Employee Orientation Handbook (11/94 edition). first produced in 1990

Provided to each new employee as a part of their departmental orientation, this manual encompasses County, Departmental and Program Mission Statements, goals and objectives. Specific Policies and Procedures that relate to our own employees and operations are clearly delineated at a detailed level.

3. Affordable Housing Program Administration and Guidelines (2/95 edition.

program added in February 1994)

This is a sample of the Department's approach to articulating a specific program's Policies and Procedures. This document is distributed to any parties expressing interest in participating in the programs we administer. It includes summarative information about our programs and specific detailed administrative processes and criteria.

B. Performance Measurement Program

1. Cash Management Conceits and Public Portfolio Investing Report (4/1/95)

This report was prepared for the top administrators of agencies served by the County Treasurer's Investment Pool. It was distributed in conjunction with a series of workshops coordinated through the County Education Office and individual agency Boards of Trustees. These workshops were conducted over a four month period. It encompasses mission statement, goals and objectives, policies and procedures, and portfolio performance data spanning the last three and a half years.

2. Sample Performance Statistics for Treasury Operations. Central Collections and the Trust Divisions

On-going assessment of our performance and activity levels plays an essential role in the management of our operations. The data presented within each division is generated off of the various automated systems utilized by our department. It is developed based on daily and monthly activity, and reviewed with senior management on a quarterly basis.

Establishing the management information reporting requirements is a significant exercise in the implementation and on-going operation of each new system. The data reflected in these reports spans multiple fiscal years -'evidence that while assessing performance may be a new concept to some departments, it is an ongoing endeavor in the Office of the Treasurer - Tax Collector.

However, all the reports and assessment tools don't get to the fundamental underlying issue. That issue is best posed by a question, "Are you using the data you generate about your performance to modify and improve your organization so as to realize your mission statement in a more cost-effective manner?". I will share with you four examples which exemplify this nexus.

1. The Issuance of Secured Property Tax Bills

Prior to 1991 the County prepared our own tax bills, overseeing the printing with County staff, organizing and stuffing the envelopes ourselves, and delivering the bills to the post office for mailing. t analysis conducted in 1990 quantified the staff time involved and targeted the delay in mailing which oft times t our ability to meet the statutory deadline of October 3 1st. We were able to contract the printing and mailing of bills to a vendor who had the capability to upgrade the tax bill stock, laser print all bills, bundle multiple bills for multiple property owners, apply a mail hygiene program to reduce the quantity of returned mail, and accelerate the mailing of our bills by three weeks. All that with no county staff effort. In 1993 we added optical character recognition scanlines to our bills allowing them to be processed through a remittance processing machine (the same technology used by large banks and credit operations) thus automating the posting of transactions on a same-day basis. We moved from a four day turnaround on deposits to a same day performance level. This conversion is central to the increased efficiency realized by our office. We have cut staff (four FTE have been eliminated), reduced costs, increased the speed and accuracy of our processing activity. We have also accelerated the cashflow to the county treasury allowing us to invest those funds and generate an additional three weeks of interest earnings on over $12 million dollars each year (at a 5 percent rate of return that adds over $35,000 to our portfolio performance each year!).

2. Staffing of Treasury Operations

In mid-1992 we installed the Quadrant Cashiering System in our Santa Barbara and Santa maria offices. This represented the first time we were able to track with ease such things as the volume of transactions, different types of payment activity, the average time per transaction, or the time at which transactions occur. Prior to implementation of the new system our office used calculators and processed each deposit manually. The typical transaction consumed 2-3 minutes and there was no record of when it occurred. In the performance measurement data provided to you is a histogram generated by Quadrant which shows at what time of day treasury transactions occur. It is clear that almost 75% of the transactions occur before noon. Office coverage at lunch and during the preparation of the daily deposit extends the workload until 2:00p.m. each day. With two years of data to support our analysis, we moved to the creation of a number of 5/8 positions that work from 8:00 a.m. - 2:00 p.m.. This has allowed us to achieve comparable performance while reducing staffing by one full-time equivalent position (an annual savings of over $25,000).

3. Automated Transfer of Delinquent Accounts

In reviewing the performance statistics provided by the CBS Collection System we put in place in 1992, we noted that Health Care Services accounts had particularly low collection results. The account profile indicated that we were not receiving these accounts until they were s~ to nine months old. We met with Health Care Services and proposed that they automate the transfer of all accounts after a 45 day grace period. Health Care Services paid for the programming necessary to allow the automated account transfer when they realized the revenue potential. Collection results on those accounts skyrocketed with the implementation of the accelerated transfer with revenues expanding by over 18 percent in the first year. While we did experience an increase in workload, we were able to avoid adding any staff to accommodate this change, and the collections and billing workload for Health Care Services declined appreciably. It is interesting to note that the county budget process discourages this type of joint venture (Our budget doesn't get any credit for the increased revenues or cost savings).

4. What is the impact of adding additional collection staff?

This January we hired two new collectors to' pursue delinquent accounts. These positions had been left vacant as the result of a combination of staff turnover, meeting mandated budgetary salary savings and budget reductions, and lags in the county recruitment process. Utilizing data generated by the Auditor - Controller's Cost Management Information System (CMIS) and our internal accounting data we have tracked our collection performance closely over the last four months. Over the prior 18 months we averaged about $25,000 per month in delinquent account collections for each collector on our staff. Since February 1995 we have averaged $33,000 per month in delinquent account collections for each collector on our staff. This is a significant gain in productivity and reflects the incremental benefit of added collectors. We believe that if the County were to expand our staff we could achieve similar results. Once again, the current County budget process discourages such an investment because the costs are incurred within one budget unit, but the revenues are posted elsewhere. Because support service budgets (such as the Treasurer - Tax Collector) are not credited for such performance, nor for the cost allocation component of their budgets; distorted financial data is presented to the Board of Supervisors in the budget process.

I believe the track record outlined above speaks for itself. It is a track record that reflects the best in current management philosophy with strategic initiatives designed to achieve a well defined mission statement. As an independent elected official, I take the strategic planning process very seriously. It is only through the establishment of a clear mission statement, development of comprehensive goals and objectives, the creation of specific policies and procedures, effective employee training and thorough performance measurement; that I can meet my ethical and fiduciary responsibility to the public.

Item #7-c

I concur that the a selfadminstered management audit program with periodic outside review is a strategy that all departments should employee to assure the on-going effectiveness of our programs on a county-wide basis. My Assistant understands my commitment in this area and initiated the request for the Auditor -Controller's staff to conduct a management audit of the Assessor's Office during his tenure as Interim Assessor.

As the enclosed material indicates, my office already has such an internal management audit model in place. While the proposal would formalize our approach to a greater degree, I feel the benefits that would be realized on a county-wide basis merit the implementation as proposed. We will be working on the design of a more formalized selfadministered management audit in the coming year.