In this episode, we'll be exploring some key challenges facing local government finance teams and how they're responding using innovation and technology. Learn more about how public finance teams are going beyond traditional accounting roles to drive transformational change.
This discussion accompanies our new report: Innovation in Public Finance, which is now available at sapconcur.govlaunch.com. The guide features dozens of local government success stories and is made possible in part by SAP Concur, a company that's helping government teams around the world automate spending processes so they can run more efficiently.
Govlaunch is joined by a tremendous panel, including Hughey Newsom, Chief Financial Officer at Wayne County, Michigan, Sara Robinson, Finance Director for the City of Deer Park, Texas, and Jim McClurkin, Senior Director for Public Sector at SAP Concur.
More info:
Featured governments:
Wayne County, Michigan
Hughey Newsom, Chief Financial Officer
City of Deer Park, Texas
Sara Robinson, Finance Director
Discussion Facilitator:
SAP Concur
Jim McClurkin, Senior Director for Public Sector
Visit govlaunch.com for more stories and examples of local government innovation.
Lindsay: (00:05)
Welcome to the Govlaunch podcast. Govlaunch is the Wiki for local government innovation and on this podcast, we're sharing the stories of local government innovators and their efforts to build smarter governments. I'm Lindsay Pica-Alfano, co-founder of Govlaunch and your host. Today we'll be exploring some key challenges facing local government finance teams and how they're responding using innovation and technology. This discussion accompanies our new report innovation in public finance, which is now available on govlaunch.com. The guide features dozens of local government success stories and is made possible in part by SAP concur, a company that's helping government teams around the world automates spending processes so they can run more efficiently. I'll turn now to James to learn more about how public finance teams are going beyond traditional accounting roles to drive transformational change.
James: (01:05)
Hello and welcome everyone. Today we'll be exploring some key challenges facing local government finance teams and how they're responding using innovation and technology. I'm pleased to be joined by a tremendous panel, including Hughey Newsom, the CFO for Wayne County, Michigan, the 19th, most populous county in the US with just shy of 2 million residents, uh, and includes the city of Detroit. We also have Sarah Robinson, finance director for the City of Deer Park, Texas, a community of around 33,000 plus residents.
And finally Jim McClurkin, senior director for public sector at SAP Concur. Jim works with local government finance teams across the country. He's been doing this for a very long time and has a unique perspective looking from the outside in. So I'm really excited to have you guys here. Thanks so much for joining us, but let's jump right in.
James: (01:58)
Government finance teams are facing an increasingly complex and diverse set of challenges right now from the current economic landscape and the uncertainties and pricing pressures that come along with it. The repercussions of COVID, workforce issues, growing digital demands from residents, ever changing reporting requirements, even a greater focus on transparency. Turning to you first Huey, what are some ways you're using technology o address pain points or areas where there's a need for improvement? I think I read somewhere that you're using air table to temporarily get you through to your new E R P upgrade. I'd love to learn more about that.
Hughey: (02:35)
So COVID, didn't ask us for a great time to strike. I think we needed a restart, but we were probably two thirds on the way to what would've been probably an adequate E R P implementation, and then COVID decided to strike, and there were two problems, right? Obviously you have a significant issue with staffing, a pandemic emergency the need to manage that emergency, but then the onslaught of federal funds that came afterwards, right? So we had two major hits we had to deal with and make sure we had information to the right people at the right time, including the general public. But then we got to the cor virus relief fund as well as to ARPA, which is the American rescue plan act and the state and local fiscal relief fund as well. So the county got a grand toll of 207 million from the CRF and then another 340 million from slur.
Hughey: (03:29)
So now you, our general fund is 580 million on a good day. Okay. sadly the one thing I wanna do with the money, I really shouldn't do, which is hire people, right? Because it's a one time cash infusion yet. I need people on a recurring basis. I need recurring taxes. And the thing that I'm sure most of your listers know better to do is to hire people based on a one time cash infusion. You need recurring, you know, just general budget, but to your point, we had a couple of problems. Number one, we had to keep things going with our E R P implementation, which everybody says, things are gonna be magical once the E R P implementation gets here. But then at the same time, we had to come up with what I call the interim phase, which is how are we gonna do what we need to do with more volume, with tools that we've been trying to sunset?
Hughey: (04:17)
And so my strategy was let's work on something that's more short term, define our business processes from an interim standpoint, and then let's move on and talk a little bit, our permanent business process, which would happen after Oracle goes live because we needed something in place right now to be able to say, Hey, we spent this much money on payroll that would be dedicated to slur temporarily or to CRF, you know? And so we were not able to do that with the tools we had. So we're going to utilize air table to manage our stuff for that 340 million. It will all flow through an air table through an air table setup so that we can go at any point in time and make sure that it ties to, you know, we've spent this much money. We can show in the ledger that we spent this much money, this much money's encumbered at any one point in time.
Hughey: (05:08)
Now, as you can imagine, when you have a proliferation of tools, you're gonna have a challenge of keeping everything aligned, which is what we've talked about quite a bit. It's very dangerous when you start thinking about using an interim redundant tools to track your spend, but you have antiquated technology that doesn't do the job. So now you gotta figure out a way to make sure lined up, which is disadvantageous, but it wasn't again, a temporary inter inter solution that we're working out because we don't have what we need in order to literally manage a whole new general fund of spend.
James: (05:45)
And Excel wasn't gonna do it for you, right?
Hughey: (05:47)
Could have been in my office three hours ago, as we're working through our Excel models that we're using to build our normal fiscal budget. And we're trying to figure out why in the world somebody put that formula in that cell and why they hardcoded that number in that cell. It is insane. So long story short, no Excel, you know, one more Excel set series of worksheets. Isn't gonna cut it.
James: (06:13)
How did airable enter the equation?
Hughey: (06:17)
I think of the world in terms of front office and back office. And what we did was we extended air table because it was a tool that was recommended by our consultant Scott House for use on for what I call the front office project. So they were originally supposed to use air table as a way for us to each individual project that was gonna be funded was to track it, right? So just status, who's the champion where our record, you know, give us a path. And this network drive for records are gonna be, or we're gonna be kept. Who's a champion in the community. Who's a champion executive suite, et cetera. I said, well, wait a minute, hold on. If we already have a record, if you will, of where these pro the stats of these projects, I have no way in my ledger or my subledger to be able to track things at a project level, right? Let me go ahead and at least see if I can manage this. I call it malleable tool so that I can configure it in such a way that I get what I need. And that that's how we went through semi painful process. I'll say it a couple of months to sit down and really figure out how we could extend it so we can track the right attributes. And then also build a process that, you know, most important thing is make sure that at any point in time, I reconcile to my ledger.
James: (07:33)
I love that. I love the idea of using low code tools to, to get you through. That's, that's something we're actually tracking a lot on gov launch, and I'd love to see more of it when possible. So, so turning to you now, Jim, you're constantly interacting with finance teams across the country. I think you have a really great pulse on what's happening in this space. What are you seeing from the field? Uh, are there certain pain points that are more common than others? Um, and are there certain technologies that finance teams are focusing their sites on right now?
Jim: (08:02)
Oh yeah. Sure. And you're right. I, I have a unique perspective cuz I see all of it, right. I'm big, small, mostly big, but in, in lots of different areas and Hughey he hit on it, you know, one of them is, you know, a lot of people got a lot of money and now there was a delay in spending it because they weren't sure how to spend it, what they could spend it on. And how did they report on spending it all at the kind of the same time? Right. So that caused a lot of confusion and somewhat of a delay of use of some of that money. A lot of the common themes though that I see there's still a lot of manual process out there. So there's this struggle to digitize finance groups in, in the public sector, moving folks off of manual processes that sometimes have been in place for decades to the thought process of, okay, we're gonna automate this so we can redeploy you to do more strategic work for the taxpayers than you're doing now.
Jim: (08:56)
Right? So that's a pretty common theme that we see across the board. And we're seeing a lot of people now say, okay, I gotta get to the cloud as well, a lot more dependence on going to cloud solutions and getting away from on-prem because it, the old and a lot of providers are leaving the on-prem space, right? So, so there's a need to do that across many, many organizations, states, counties, cities. So there's, there's a lot of, of regular themes around what I refer to as strategic and tactical, right? There's the tactical stuff at the ground level, manual processes and workflow approvals and all that kind of stuff. But then there's the, okay, now I'm getting new tools. And as Hughey mentioned, I've got new tools. Now I've got new data and I've got visibility now to stuff I never had on a timely basis from a strategic level as an organization. Now, how do I move forward? I've got all this stuff now I've gotta maximize use of it. So that's kind of how I see a lot of it going on out there across the country.
James: (10:01)
Sarah, you head up the finance team for a community with very different needs and resources. What are some of the main challenges you're grappling with right now? And are there any tools that are making an impact in your office?
Sarah: (10:14)
Sure. Well, at the most basic level, there are capabilities and functions within our current E R P system that we're just not utilizing. So I feel like I have such a unique opportunity. I've actually been with the city of deer park for about five months now. And I came from another municipality prior to that. And so really being able to step in and evaluate what we are doing and what we aren't doing and what we're capable of doing right now. There are definitely some things that we can utilize that where we're not, that could make us more efficient, but to speak more on Huey's point. Gosh, we've had an influx of APA funds as well, and we're not to the tune of 340 million, that's for sure. But we have so many moving parts and so many projects ongoing that are completely unrelated. We've reached the point where we've outgrown the model.
Sarah: (10:58)
So it's becoming very inefficient to have a decentralized process with 20 different spreadsheets and things of that nature. And so those are probably the biggest challenges that our team is currently facing right now, the kinds of things that keep me awake at night, right? So realizing that there's a need, um, and then those types of solutions to be able to better utilize and make processes more efficient, um, because we're starving for that transparency and that accountability. And we're limited in what tools we have currently to be able to do. Um, so first just having the knowledge that we need to move in that direction has been key.
James: (11:37)
So moving away from technology, because as we know technology, isn't always the answer. In fact, most of the projects shared on Govlaunch, involve government teams looking inward to update processes, empower employees, and foster collaboration. What are some of the ways you're looking inward to make certain improvements you, you knew you had to make. Hughey, let's start with you.
Hughey: (12:00)
This is a very critical question for us right now. Think everybody knows the city of Detroit went bankrupt in 2012, 13 to break the county was on the brink of, of bankruptcy and worked with the state. And we were able to pull ourselves out of it. And in order to do that, we went through the usual restructuring exercise slash pen pension slash benefits, retire healthcare is a monthly stipend. It used to be an open ended commitment. And we turned a 85 million structural deficit into last year return. We added 707 70 5 million restricted fund to the general fund in order to get to that point. Boy, boy, we cut as much off the bone as we could. We didn't really ask ourselves this, the question of, Hey, you know, operationally, what is it that we do? How do we do it? And how do we make sure that we can, we can provide service internal services to, you know, to internal internal customers as it relates to finance or our external customers who are, of course the taxpayers we were in a fiscal crisis.
Hughey: (13:06)
I think now we're in a operational crisis. Pretty much every municipality I've talked to, we we're all fighting for labor right now. And the reason I say all that is because we kind of have a chicken in the egg problem in order for us to utilize technology, we have to ask ourselves what, what we are doing today and how we want to do it better, which is one of the reasons why I wanted to restart our, uh, technology project. When you do a technology in implementation of this magnitude that we're going through with the E R P it's not, you're not turning on a, an application on a desktop or a laptop you're transforming the way you do business. So our business process is give an example, we're working on our budget now, and we want to move ahead to the point that we can predict how well we are addressing our vacancy issues.
Hughey: (13:53)
So if we have to turn off the, in terms of compensation adjustments, we can do that. We don't have the business processes here or, or the people or the staffing volumes here to execute that business process when we have that feedback loop. So now we're stuck and we can't comfortably move our compensation ahead aggressively to the point we feel comfortable that we're going to be able to turn that spigot off in enough time. And so going back to your question, I think, but in the perfect world, the way it would work is you have people in here process always leads to technology, right? It always leads technology. How do I, you know, sit down the way I was taught BPR 1 0 1 before I implement a technology before I have a crisis. So before I have an implementation or before I do a transformation, how do I do my work today, inventory, what I'm doing today?
Hughey: (14:45)
And then, you know, then figure out how to do it better, making sure you have everybody in the continuum of skills and rates there to do it. Then you ask yourself what tool is best to fit here. And then that's when you go from there in a perfect world, but you have to have the people to do that. And our problem, you know, I like what Jim was saying a minute ago about going to, to cloud. We are still using units based green screen, JD Edwards, and our personnel know that. So we need a cultural transformation too, when you start thinking about the idea of being cloud ready, we’re not quite there yet. So, you know, James is, we're still figuring it out. Theoretically, those are the things we need to do. We need the people so we can define what this looks like, so we can find the processes. And then the technology will fit into that. A process before process, before technology. For sure.
James: (15:42)
Turning to you, Sarah, coming from a smaller community. We often find there's a little more room for folks to experiment and make changes quickly. Same question to you.
Sarah: (15:51)
Yeah, absolutely. So I think Hugh hit the nail on the head, getting that shift in the cultural and historical mindset is such a huge thing. And not only do we have that, not only do we have the labor staffing issue that everybody else is having, because of course we do, but we being a sort of smaller community and I'm sure that a lot of other municipalities deal with these similar types of issues. We have a lot of legacy employees. We have a lot of 20, 25 year employees who have been doing what they've been doing the exact way. They've been doing it for a very long time and getting to the point where we, we sort of have redundancies in place. So we are automating manual processes or we're not letting things fall through the cracks. And, and we're not hiding behind that tradition of this is how we've always, how we've always done it. That facade right to be resistant to change is that's probably one of my biggest challenges right now. There's a lot of historical culture here and shifting that mindset can be difficult and getting people to understand that change is a good thing and you want that ownership and that autonomy and that accountability.
Sarah: (16:55)
ust getting them there, that can a hurdle, but some of the things that we've done to address that would be more cross training, right? For all of our employees, we're making sure that we're building the skills, looking at the key functions of the group and deciding whether or not we need to reallocate. Do we need more people? Are we actually overstaffed? Those are things that we all need to look for. And I definitely have a wish list of, of items that I would love to get into like software for our debt tracking and lease payments and the volatility of sales tax and being able to better analyze all of that. But it's definitely a chicken and egg situation that Huey mentioned. We get stuck in these silos and to be able to move out of that. There's a lot of non-technology things that we need to make sure that we address first and change can absolutely be a good thing. We've just gotta get to the point of moving in that direction.
James: (17:44)
That darn chicken and egg scenario strikes again. But I absolutely get it, Sarah. Building that capacity is critical, even if it's less exciting than bringing some new piece of technology in. Jim, what are you seeing? Where have you seen government teams kind of make the biggest impact by, you know, MacGyvering something?
Jim: (18:02)
Sure. Well, a couple things, first of all, Sarah Huey, you are not alone in the middle of the great resignation and the inability to create a culture for retention when you do get somebody right in that. So I see it across the country and one of the problems with technology and you mentioned, you know, MacGyvering not as much MacGyvering, but one of the problems I've seen is when, when technology companies come in and I advise our teams of this all the time, that when you're advising and consulting with clients in the public sector, there's two things you have to approach up front right away. The very first thing is change management because everywhere in the public sector, there are long term employees, long term processes, all these things, right? So you have to begin to address that immediately. And the other thing is that we tend to utilize a crawl, walk, run methodology, because if you get stuff and throw it all at 'em, you're shutting people down and then a resisting, right?
Jim: (19:06)
So you gotta pick your spots where you can get adoption and get adoption at a rate that you're kind of the odd kid out in the room. If you're not adopting the new technology, but you have to do it in a way that that creates that it's okay to change and that, oh, by the way, we're gonna start slow. And we're gonna ramp the technology up over a period of time so that you know, that whole stress level for the public sector employee comes down like, oh my God, I gotta learn all this stuff. We've gotta train. I gotta do all these things for us. As a technology, we stress this a lot change management. Isn't really critical upfront to, to address it's the 800 pound gorilla in the room, right. And you gotta get that out front right away and then figure out how you can ease a technology in and do it in a way that the adoption is successful. Cuz you guys know, sir, here, if you don't, if you don't get adoption, if you don't get acceptance of a technology, it's gonna die on the vine on you. Right. And now you've got, you've got bad tech spend on your hands. And you're trying to explain that to everybody. I see it all the time. And it, it really is a really important, I don't think talked enough about thing that's going on in the sector and that is change management cuz it's coming. Right? No question.
James: (20:29)
So moving along and I think this actually segues nicely into my next question, which involves the evolving role of a public CFO. The finance head, you know, from everything I can tell is increasingly becoming a CEO-like position. One that requires a lot more than just an accounting background. You're, you're running a complex business within an even more complex business and you're increasingly required to lead people, plan strategically for the future, improve services and, and even be a public figure. So my question is this, how do you drive innovation? I'm very interested to hear your thoughts on, on this increasingly diverse role of yours.
Hughey: (21:02)
Great question. I think the next step for us, really two things, right? The way I think about about is two things. Let's assume everything goes according to plan with our implementation, everything right now, all of our eggs are in two baskets. We gotta address compensation and bring people in here instead of having a bunch of positions in our budget that we can't hire because they're in the market, we need to right size to the point that we figure out where the sweet spot is. So let's, let's say that box is checked. That's a huge box checkbook to a point that that we're sustainable. It can weather a recession. And then the other box that that will be checked is the E R P implementation. And now everybody knows what they're doing for us to go from fair to good. I'm gonna say fair to good. So once we get to that point, I think, you know what I, what I want us to be thinking about continuous improvements in sustainability, right? Because right now we're just doing enough. What I just talked about is just, just stopping the bleeding so we can get our normal services out to, you know, for us as MMB, as finance us, to be able to serve our internal customers and our customers to be able to serve our constituents. Right.
Hughey: (22:10)
So I indirectly support the taxpayers of Wayne county. So what I want to do next instead of using the E R P to ask a question of, okay, how do you do the base level things better to a point that the people that, that you have doing it, aren't working, doing overly manual things and working at 125% capacity on a continual basis and turning themselves. Now, the next step that I want to do is okay, how do I go from good to great? I need to be able to find that sweet spot in terms of staffing department, by department, by department. Well, once I get there, I need to have processes to monitor and make sure that as things change, I'm tracking better. So is my compensation, right? Is it too high? Is it too low? What data do I have to get there?
Hughey: (23:00)
That's a little beyond what we normally do. Let's do some market resources set our compensation budget. Person's gonna say, no, no, you can't do that. That's too much. And we're all gonna set it. And it's gonna sit there for, for half a decade. We need to be more dynamic because what's good for us today in order to, to do that is not gonna be good. In three for five years, you're in a recession. Inflation starts to really hold in terms of how we pay our people in terms of what our people have to face. Those are the things we have to be thinking about. Let's stop the bleeding with staffing. Let's figure out how we do the things we need to get done better. And then let's ask ourselves after that, okay, what else do we need to be doing? Right. Another thing which, you know, take, you know, put my other head on CFO of the county, but also champion for, you know, for equity and for justice and, and those in ESG, that's something that municipalities are eventually going to have to make sure we're doing right. Is another example. Today we have to make sure that we're turning over our financial statements, getting that act for done on time, turning our annual financial audit over to the state and over to Emma for our bonds, right? So tomorrow we're gonna have to start doing a better job of reporting on non-financial aspects of how we impact the county, which, you know, equity, our environmental and climate a impact, those things. That's another example of, of things that we'll have, have to do later, but we need the foundational things right now. We need to be able to do what we're doing without turning through that major manual processes today. So we can start looking at things that we should be doing and we'll be doing tomorrow.
James: (24:41)
Absolutely. Sarah, same question to you. How do you drive innovation? How do you empower and equip your teams to do impactful work and embrace new technologies?
Sarah: (24:52)
Man, there are so many different tools that we all have in our tool belt that can be used to do this and do it successfully and to speak to Huey's point. We know the direction that we need to be heading. We know some of the things that we need to tackle or that are going to be on the horizon, but at the end of the day, the bottom line is there's only one way truly that we're gonna be successful. And that is going to be able to take place that those issues are going to be addressed and be addressed well, and to speak to Jim's point change management is the key there. When I'm thinking of approaching, you know, the 20, 25 year employees and how we're going to accomplish this because ultimately the workforce is how we're gonna be successful in getting all of these things done. There are certain attributes and, and skill sets that you just can't teach. I mean, sometimes some people have this perfect set of attributes and, and some people have attributes that serve them just as well in other functions, other capacities, when you're approaching your staff and the different levels of hierarchy and legacy.
Sarah: (25:51)
And however it is that you wanna look at it, you have to be able to have the bandwidth and the wherewithal to truly understand what those attributes are, what can be taught, what can be developed, where your weaknesses are, and for yourself too, and not just your staff, because those weaknesses serve a purpose, right? And we want to be able to build them up when we can to support others within our group. And our strengths are there to make sure that we don't fall and fail. Whenever those weaknesses are, are at the forefront of what we're doing, but using those attributes to give your staff and your team. I mean, citywide, even we can engage citizens with some of this. If we really wanted to go that far with the conversation, giving them that accountability and that ownership of what they're doing, there's more than one way to accomplish a goal. Nine times outta 10, it's going to be the end result is what is important, not necessarily how we get there. And so letting them have that ownership of, of the process for themselves really goes a long way. Uh, I have found in my, just in my professional career, you can't go into any situation, guns blazing and, and tell them that this is how it's gonna be, and it's my way or the highway.
Sarah: (26:56)
And you better get on board cuz that just does not work. Some people are more direct and they're able to facilitate and interpret those kinds of interactions, but I wouldn't recommend it. You're not gonna get very far. So that change management piece is so key. In my opinion, it's the most important tool in our tool belt that we have to address all of these things that we know are, are going to be on the forefront in our very near future.
James: (27:23)
Jim, on that point and from your perspective, what has separated the communities that have been able to undertake this change management successfully?
Jim: (27:31)
You know, the classic definition of the diplomacy is that when you're telling someone to go to hell, you do it in a way that they look forward to the trip. I like that. And so to sit so, so to Sarah's, so Sarah's point can't go in, you can't go in guns blazing, right? So some of the successes I've seen where is where organizations have taken more of a workshop approach, if you will bringing small groups together, a lot of times groups that collaborate together and people look at it two ways, really that sometimes they'll bring, you know, groups that usually work together together or they'll separate and have people collaborate with people they don't normally work with and have them buy into the process by having some ownership of that process. Well, here's what I'd really like to do. Well, if, if you weren't standing here at the machine, feeding the scanner stuff, or if you weren't, you know, filing paper, doing all these mundane things that you've gotten used to, what is it you'd really like to do?
Jim: (28:33)
What other value do you think you have that is not being mined by our organization, that we're wasting your time having you do these things. I'd like to know what, what it is that you think you could do to help move, move the ball down field for us. Right. And get that, get that collaborative buy-in because it's particularly true with we're deeply entrenched employees. They've got the retirement date pegged on the calendar, right. And they know, you know, in the military you said, oh man, I'm short. You know, I got I'm three months short, you know, those kinds of things to buy in for that type and to have them share the process and, and have some ownership of it is really at, at the base of a lot of that stuff ending up being successful.
Jim: (29:21)
It's hard, right? Sometimes it's, it's asking those hard questions in a way that people don't feel they're put on the spot and that not everybody can do that. Not everyone has that skillset. And then the other thing I've seen is that in that environment leaders like Huey and Sarah have found captains, if you will, people to be the next level person to go to work with their peers, you know, kind of like, you know, the team captain going, come on, let's go. We can do this, you know, and work internally creating again, organizationally, if you will, this, you know, ownership and buy-in of the folks that in reality, it's, it is gonna impact them the most. Right? So those, I think those are just some of the things where people that I see have been very successful at it. They're more employing that type of technique than, than the general patent version. Right. I think it's really important.
James: (30:17)
Well I'd like to thank you all for joining us today. Really appreciate your time. Uh, between talking to you guys and putting together our innovation and finance report, I learned a lot, including just how important your role is in driving transformation. Thanks for listening. And back to you, Lindsay.
Lindsay: (30:43)
I'm Lindsay Pica-Alfano and this podcast was produced by Govlaunch with support from our friends at SAP Concur. You can subscribe to hear more stories like this, wherever you get your podcasts. If you are a local government innovator, we hope you'll help us on our mission to build the largest free resource for local governments globally. You can join to search and contribute to the wiki@govlaunch.com. Thanks for tuning in. We hope to see you next time on the gov launch podcast.