The Jacksonville Electric Authority has had to face this challenge after a recent investigative report exposed numerous workers slacking on the job.  Bad media publicity about the quality of their linesmen could not have come at a worse time for JEA officials.  Already plagued by customers unhappy with increased fees and an ongoing criminal investigation into employee thefts; publicity on the laziness of their workers did nothing to improve a poor customer image. JEA managers now have an inordinately difficult task in regaining customer support while trying to discipline and restructure a heavily protected, union workforce.  If JEA managers are to succeed in this task, they will need to show the value their services provide to the community and demonstrate that they will no longer tolerate poor performance or criminal activity within their ranks. Motivating a beleaguered set of workers, who have been openly harassed by an outraged clientele, will not be an easy task.

However, JEA employees can be shown that they do indeed provide a valuable social purpose but managers must be specific in what they hope to achieve and provide ways that employees and customers can measure their success. If done properly, JEA officials can untangle the Gordian knot of problems they face and regain the confidence of a client-base by providing measurable goals that show their employees the value they are to their community.

When taxpayer dollars fund salaries, public scrutiny of job performance is always going to be high. JEA officials must account for the enhanced visibility their workforce is exposed to and instill in them a sense of purpose to serve the public.  If a workforce shows resolve in doing their job for the community, the public will notice and life for JEA managers will not be fraught with hostile customers and poor publicity. Workplace motivation and measurement can be an administrator’s best allies if their workforce is empowered with the belief that what they do has real merit and benefit.

This past weekend, David Hunt of the Florida Times-Union wrote an article about the groundbreaking of a $2.8 million project that would bring a poor Northside community onto the city's sewer system.  The project, which was funded by federal and St. Johns River Water Management District grants, is being overseen by Jacksonville's Water and Sewer Expansion Authority.

JaxPoliticsOnline.com looked at the Water and Sewer Expansion Authority several weeks ago, questioning whether or not their department was duplicating services that JEA already (or could easily) provide.  We asked those questions because of the controversy that arose at a recent WSEA Board Meeting where the board voted to grant across-the-board raises to WSEA's employees, despite the concerns of several board members that raises would not look good in a time of "belt tightening" around the city.

The WSEA was created in 2003 to allow voluntary connections to the city's sewer system.  In a 2005 interview with the Times-Union, Sherry Hall, the former communications director for the WSEA, said that, under the system, residents could borrow from WSEA's original $5 million seed to pay for construction to bring water and sewer services into their neighborhoods.  The loans would be made at market interest rates and could be paid back over a 30-year period. The expansion authority would also contribute up to 30 percent of that cost.  That 30 percent; however, was a one-time offer. Those who did not accept the city aid at the time, do not have the option of later participating.  They would have to pay the same amount as their neighbors without the 30 percent contribution or the loan option.

In addition to the costs to bring the water and/or sewer lines to the neighborhood, the city estimates that current costs are between $3,500 and $15,000 per household to flush, empty and remove a septic tank, then connect to the sewer according to a Times-Union article from earlier this year,

The Executive Director of the WSEA has seen his compensation nearly double since he was hired in 2004.  His original salary was covered by JEA, but WSEA now pays him a consultant fee of $315,000.  According to recent council auditor's report , the WSEA is now capped at 3 employees (communications director, asst. communications director & GIS specialist).  These 3 employees have a current budgeted salary expense of $175,000 plus benefits---this in addition to the consulting contract with WSEA's Executive Director.  Because of the raises voted on by WSEA's board, despite the objections of its chair, salary expense for those three employees will rise to $182,000 this year plus benefits and the consulting fee for the Executive Director will rise to $326,000.

The WSEA is proposing to trim its travel budget next year---to $5,000.  In previous years, they have budgeted $20,000 for travel.  This year's budget was $10,000.  Nevertheless, that expense seems to have been rather high for a department that finances sewer hook-ups, particularly when the department has only 3 staff members plus a consultant.

The question for the City Council to answer as the WSEA prepares to present its proposed budget to the Council, is why couldn't JEA be doing the same thing?

Now that we have celebrated the 40th anniversary of Consolidation, we should perhaps acknowledge that it's time to take a another look at the efficiency of our consolidated government.  The Charter Commission, a once-a-decade group appointed to consider changes to the city's charter, is currently looking at suggestions for improving the form of government that Jacksonville/Duval County pioneered to the rest of the country in 1968.

One of the suggestions that has been made includes re-examining the role of the General Counsel's Office in regards to any potential conflict of interest that might arise between representing the Mayor's Office and the City Council (as well as the other Constitutional Officers).  Another suggestion that has been made is the adoption of staggered terms for City Council members.  The ideas are numerous, and many sound quite reasonable, but there are a few that have yet to be mentioned that should also receive attention.

First of all, why does a consolidated government need 19 elected City Council members?  (This, of course, on top of the five constitutional officers that are also elected.)  Do 19 representatives for a population of 850,000+ suggest an efficient consolidated government?  Orlando has 6 City Commissioners, which when combined with the 6 County Commissioners equals a total of 12 representatives---for a population nearly 200,000 larger than Jacksonville.  Tampa and Hillsborough County are similar.  Their City Council, when combined with the County Commission, equals 14 representatives---for a population of 1.2 million.  Even Miami and Miami-Dade have 1 less combined City Council/County Commissioner than Jacksonville---for a population 3 times as large.  With a proposed City Council budget of $9.5 million, perhaps it's time to re-visit the need for 5 at-large seats and explore reducing the number of council districts.

One of the suggestions that has been floating around for the Charter Review Commission is a look at whether or not the Sheriff should be an appointed position.  This would, in my opinion, be a bad move.  Duval County has benefited from a Sheriff who is directly accountable to the public.  It's hard to imagine an appointed Sheriff willing to take the Mayor's Office and the City Council to task over the budget like John Rutherford has.  While the Sheriff's Office should be forced to justify expenditures just like any other city department, it's hard not to admire a man willing to put his political capital on the line to do what he feels is in the city's best interest.  Appointing future Sheriff's would likely lead to "Yes Men (or Women)" who were unwilling to challenge the Mayor who appointed them, even when they felt it was in the best interest of their department.

On the other hand, the City and the Tax Collector have been at war for several years over who is responsible for doing what functions and, many counties have already moved to consolidate the functions of the Tax Collector within county government.  Perhaps Jacksonville should explore that option.

Another suggestion that has been floated has been the possibility of an appointed school board filled with volunteers.  This idea, which the Times-Union touted in a June 7 Editorial, is intriguing.  The plan would be modeled after the university board of regents model where appointees---often distinguished community leaders---serve without a salary.  As it is, the Mayor and the City Council are often incorrectly viewed by voters as being responsible for the City's education system, this type of system would place the responsibility for high-quality appointees at their feet.

One final suggestion to explore would be a review of the city's independent authorities.  With the tremendous growth at the JaxPort and the consistently-high profit margins maintained by JAA, wouldn't it be nice if JEA wasn't the only independent agency that made an annual contribution to the city's revenues?

On July 28, JEA will present their budget presentation to the Jacksonville City Council.  Included in that presentation will be the funding they (and the City) are proposing for the Water & Sewer Expansion Authority. 

The Water & Sewer Expansion Authority (WSEA) is a separate independent city agency that was formed in 2003 to assist homeowners in voluntarily making the transition from septic services to municipal water and sewer.  Its stated purpose would seemingly fit with JEA's responsibilities and, in fact, JEA supports the WSEA by providing nearly full utility services that include capital project management, purchasing, billing, customer service, operations, maintenance and other accounting and contractual services.  Additionally, the WSEA operates within JEA headquarters.  So, why exist as a separate authority?

Given the events of a recent WSEA Board Meeting, perhaps City Council (and also the Charter Review Commission) should more closely examine the apparent duplicative efforts of JEA and WSEA during deliberations.  At the June Board meeting of the WSEA, there was significant controversy over the nearly $500,000 contribution from the City and the proposed raises for the Agency's three employees.  The chair of the Board, Jeanelle Wilson, expressed concern over granting raises to employees in a time when the city has expressed a need to trim expenditures.  Her concerns were overridden, however.  After the board found themselves unable to pass the budget as proposed (the vote was tied), an amendment was offered by board member Harriet Jones to trim employees salaries by 1%.  That amendment was defeated as well.  In the end, the board voted 4-2 to increase salaries by an average of nearly 4% across the board.  For an agency funded entirely by city and JEA contributions, that's not exactly a promising start to the "cost trimming" that is being promised at all levels of local government.

In the end, the question that perhaps weighs more heavily than whether or not the raises were necessary, is the question of whether or not it is cost effective to maintain the WSEA as a separate agency?  If they are utilizing and billing JEA for the majority of their services, would the city be more effectively served by eliminating the expense of maintaining yet another board and merge them into JEA?

Given that 50% of the residents in the neighborhood have to voluntarily agree to be hooked up to municipal water and sewer services for WSEA to actually enter the picture, one can't imagine that too many people are rushing to WSEA's Church Street offices begging to begin paying JEA water and sewer charges.

Peyton's response?

The mayor's office said it is watching closely but actually believe the city is doing well considering the economic climate.

Mayor John Petyon told Channel 4 that city leaders know rough times are ahead. He did not talk about layoff, but the possibility looms. Also, there will be scheduled increases in new fee that could help the situation.

 "I think 2009 is going to be a challenging year, economically. I am not so sure we have hit the bottom yet. Certainly businesses are challenged, families are challenged, government is challenged and this government is challenged quite frankly. All of us are going to have to make decisions on priorities," Peyton said.

Let's take a closer look at what was revealed in the Council Auditor's report about the City and its independent agencies. 

CITY OF JACKSONVILLE

We noted that a number of the City of Jacksonville’s various sub-funds presented in this quarterly report are financially challenged. The reader will note many of the same comments repeated for several sub-funds. We are concerned regarding the cumulative negative effect of these sub-funds on the overall financial condition of the City.

 

General Fund / General Services District

As discussed in the Finance Director’s narrative the General Fund experienced an overall favorable variance for the fiscal year of $11.5 million as compared to budget. The  favorable variance was primarily due to expenditures being $40 million below budget. The $11.5 million favorable variance represents approximately 1.2% of the total General Fund budget.

 

Building Inspections (Sub-fund 159)

The Building Inspections Sub-fund experienced an overall unfavorable variance of ($1,320,434). Revenues for this Sub-Fund experienced an unfavorable variance of ($2,116,755) for the fiscal year. The FY 2007/2008 budget used a Transfer from Fund Balance of $3,560,300, as a funding source in order to balance the budget.  Building Inspection’s Fund Balance is not sufficient to provide a similar size transfer for FY 2008/2009. Ordinance 2008-484-E was enacted to appropriate $1,800,000 from the General Fund to the Building Inspections Division. The Administration will need to cut expenses and/or increasing fees in order to provide for a balanced FY 2009/2010 budget.

 

Parking Garage Revenue (Sub-fund 412)

The Parking Garage Revenue experienced an overall unfavorable balance of ($174,046). The balance sheet for Sub-fund 412 shows a negative cash balance ($1,002,166) with total liabilities of $10,534,279 and negative fund equity of ($6,027,680). We are concerned as to whether or not Parking Garage Revenue will have the financial capacity to meet its liabilities. 

 

Jacksonville Municipal Stadium (Sub-fund 4A1)

The Jacksonville Municipal Stadium experienced an overall unfavorable variance of ($1,027,674) for the fiscal year. The balance sheet for Sub-fund 4A1 shows a cash balance of $86,904 with current liabilities of $3,208,465, and negative fund equity of ($1,567,016). We are concerned as to whether or not The Jacksonville Municipal Stadium will have the financial capacity to meet its liabilities. The FY 2007/2008 budget used a Transfer from Fund Balance of $2,353,314, as a funding source in order to balance the budget.

 

Times Union Performing Arts Center (Sub-fund 4D1)

The Times Union Performing Arts Center experienced an unfavorable variance of ($706,459)  and also the report shows that the Performing Arts Center has a cash deficit of ($181,041), a total asset deficit of ($98,718), total liabilities of $595,980 and negative fund equity of ($694,698).  The Jacksonville Symphony Orchestra strike and general economic conditions have been the primary reasons for the financial condition of the Times Union Performing Arts Center. We are concerned as to whether or not the Performing Arts Center will have the financial capacity to meet its liabilities.

 

Fleet Management Operations (Sub-fund 511)

Fleet Management Operations experienced an overall unfavorable variance of ($1,815,355) for the fiscal year. The balance sheet for Fleet Management Operations shows a negative cash balance of ($834,289) with current liabilities of $2,828,522 and negative fund equity of ($478,861). We are concerned as to whether or not Fleet Management Operations will have the financial capacity to meet its liabilities.

 

Fleet Management Vehicle Replacement (Sub-fund 512)

Fleet Management Vehicle Replacement experienced an overall favorable variance of $877,594 for the fiscal year. However, the balance sheet for Sub-fund 512 shows a cash balance of $3,153,442 with current liabilities of $11,835,815. We are concerned as to whether or not Fleet Management Vehicle Replacement will have the financial capacity to meet its liabilities.

 

Copy Center (Sub-fund 521)

The Copy Center experienced an overall unfavorable variance of ($312,771) for the fiscal year.  The balance sheet for the Copy Center shows a negative cash balance of ($131,140) with current liabilities of $367,448 and negative fund equity of ($182,656). We are concerned as to whether or not the Copy Center will have the financial capacity to meet its liabilities.

 

ITD Operations (Sub-fund 531)

ITD operations experienced an overall unfavorable variance of ($6,333,384) for the fiscal year.  This appears to be attributed to ITD billing approximately 74% of their budgeted charges. The balance sheet for ITD Operations shows a negative cash balance of ($973,311) with current liabilities of $1,876,564. We are concerned as to whether or not ITD Operations will have the financial capacity to meet its liabilities.

 

Radio Communications (Sub-fund 534)

Radio Communications experienced a favorable variance of $478,330 for the fiscal year.  However, the balance sheet for Sub-fund 534 shows a negative cash balance of  ($526,067) with current liabilities of $432,819 and negative fund equity of ($1,148,513). We are concerned as to whether or not Radio Communications will have the financial capacity to meet its liabilities.

 

INDEPENDENT AGENCIES

JEA

Electric System

The financial report for the fiscal year ended September 30, 2008 indicates budgetary stress in operations for the Electric System on the fuel side. For the twelve months of the fiscal year, JEA incurred an operating deficit of $1,570,518 for Fuel and a surplus of $3,886,587 for Base side operations for a net operating surplus of $2,316,069. The JEA Variable Fuel Rate Policy allows the fuel rate to be adjusted, to recoup costs from one period to the next, using a method approved by the JEA Board. The variable fuel rate charge was adjusted during the year when the costs for fuel deviated more than ±10% of the original forecast. On June 17, 2008 the JEA Board ratified action to be taken (see Ordinance 2008-646 E) to revise the FY 2007/08 budget and increase the current variable fuel rate by $15 per MWh or the equivalent of $61 million. Due to lower than estimated revenue, the Fuel Rate Stabilization Fund did not recoup enough to cover increased fuel costs and replenish a reserve balance, therefore, the Fuel Rate Stabilization Fund and has a $0 (zero) balance at fiscal year end.

 

Water & Sewer System

The financial report for the fiscal year ended September 30, 2008 shows that the Water & Sewer System produced an operating surplus of $48,110.

 

District Energy System

Although it produced a surplus of $30,221 for the fiscal year, the District Energy System has negative Fund Equity.

 

JEA Capital Projects

Per the JEA Budget Office, the Capital Budget variances projected for the Electric, Water & Sewer, and District Energy Systems are based on information provided by JEA engineers who have identified a number of projects that will not be underway by year-end. As seen on the schedule, these revenue and expenditure variances offset each other and do not cause budgetary stress.

 

Water and Sewer Expansion Authority

WSEA’s quarterly summary for the fiscal year ending September 30, 2008 indicates no budgetary stress.  The St. Johns River Water Management District has granted the City of Jacksonville and WSEA a total of $14.8 million to further the City’s septic tank  remediation program. The grant will fund two projects that the City and WSEA will manage. The first will be the completion of the BJP Septic Tank Phase Out project in Oakwood Villa Estates and second, a pilot project in Lincoln Villas which is currently ranked number four on the City’s list of failed septic tank areas as designated by the Duval County Health Department. Completion of the two projects is scheduled for December 2009.

 

Jacksonville Transportation Authority

The financial report of the Jacksonville Transportation Authority (JTA) for the fiscal year ending September 30, 2008 shows that JTA experienced significant budgetary stress. Specifically, Bus Operations required a transfer from the Engineering General Fund to fund its operating deficit of $10.5 million more than what was budgeted. Skyway Operations required a transfer from Bus Operations of $414,662 above and beyond the budgeted subsidy of $3,414,457 in order to breakeven for the year. CTC Operations required an unbudgeted transfer of $2,934,814 from Bus Operations to fund its operating deficit. As mentioned in JTA’s cover letter, JTA will seek Council legislation approving a budget amendment to true up their Bus Operations and CTC Operations budgets with actual expenditures, as both divisions overspent their budgets by $5,883,649 (8%) and $251,671 (2%) respectively.

Jacksonville Port Authority

The Jacksonville Port Authority’s (JPA) financial report for the fiscal year ending September 30, 2008 indicates no budgetary stress.

 

Jacksonville Aviation Authority

The Jacksonville Aviation Authority’s (JAA) financial report for the fiscal year ending September 30, 2008 indicates that the JAA experienced no budgetary stress.

 

 

The Jacksonville Regional Chamber of Commerce opposes two bills that would allow City Council to partially regulate what the city’s independent agencies can and can’t do. In a letter to Council President Ronnie Fussell, Chamber Chair Ron Autrey says the consolidated nature of Jacksonville’s government was established to assure the independence of those agencies. “The Jacksonville Regional Chamber of Commerce urges you to vote no” on the two bills, wrote Autrey.

Surprise!