The recent article on the FY14 budget and the controversy over pay raises included therein, that many feel were not adequately disclosed to the community, has prompted a response from TriMet, disputing the claim that TriMet accounting procedures are improper. Agency spokesperson Mary Fetsch writes:
TriMet’s financial statements are annually audited by Moss Adams. This audit is conducted in accordance with generally accepted auditing standards and the standards set for audits of Oregon public entities prescribed by the Secretary of State. The results of Moss Adams testing disclosed no findings of noncompliance, other than leaving off a webpage link to the FY12 budget. TriMet historically has kept funds in contingency for non-union wage increases until the specifics of the wage increase are known. Our CFO was involved in developing TriMet’s FY82 through FY09 budgets and does not recall ever budgeting non-union wages differently. This is a common practice for public entities in Oregon. This is especially important for TriMet because our budget is much more detailed than many other public entities. TriMet is rare in the fact that our budget details salaries down the individual position. Many budgets just have a lump sum number for entire departments and a list of position that shows position grades with a wide salary range.
With respect to specific claims concerning Neil McFarlane’s salary, Fetsch continues:
In July 2012 (after the budget took effect) the board began its annual performance evaluation of Neil, but did not conclude until December 2012. Neil had turned down the previous year’s salary increase, but the board wanted to give him a modest increase. The 3% increase matched the average given to all other non-union staff. While agreed to in December 2012, the increase was retroactive to the 2nd anniversary of his promotion. His salary rate noted in the adopted budget was accurate at the time it was voted on by the Board. His salary increase was approved in December 2012 six months after the budget was adopted. It was up to the board to make it retroactive to his promotion date of July 1.
Thoughts after the jump.
First off, if this indeed common practice among public entities in Oregon, and compliant with the relevant rules and regulations, then I retract the statement that it is “not acceptable”, and apologize for suggesting that misconduct may have occurred. If TriMet did follow the proper procedures for accounting for pay raises, and is using the same practices that it has always used, then there’s no basis for any legal complaint, or allegations of accounting improprieties. I’ve no ethical objection to treating raises that are contingent on some other event, such as a performance review, as a contingency–provided that the expense truly is contingent.
Of course, there’s still room to complain.
Should the pay raises, even if contingent, have been better documented? From a public trust point of view, I would say so–especially in an environment of lean economic times. In ordinary years, TriMet awards pay raises, promotions, COLAs (cost of living adjustments), and other such things as a matter of course, and nobody bats an eyelash–these things are a normal part of doing business. But these aren’t ordinary years–when coupled with the fare increases and service cuts that were awarded this past FY, pay raises–even if an overall drop in the bucket–become a bigger issue. Particularly after numerous public statements about how non-union compensation over the recession has suffered.
And the problem of the failure to disclose is amplified by the fact that the agency has been disclosing all sorts of things about its union contract, and how burdensome it is–and in particular, making statements on how significant parts of the contingency budget are there due to uncertainty around that contract. TriMet has been engaging in quite a bit of PR against the union recently; basic fairness suggests that if you are going to talk about operators’ compensation, then disclosure about everyone’s compensation is fair game.
As a general principle–and speaking as a citizen, an activist, a taxpayer, and as a rider, the more transparency out of TriMet (or any public agency), the better. Contingency funds are an essential part of any budgeting practice, as nobody can predict the future, and even the best laid plans can be changed by circumstances. But if a contingency budget includes specific items with specific estimated dollars attached–and pay increases are generally a predictable expense overall, even if it is not known who will get what during the budgeting practice–it can’t hurt to call this out in the budget. The agency’s critics would have likely complained then (they are certainly complaining now!), but wouldn’t get to accuse TriMet of trying to hide the ball.5 Comments