3 Ways Financial Transparency Builds Operational Efficiency
As my former boss, Los Angeles City Controller Ron Galperin likes to say, there is a bit of a paradox in how we talk about open data.
When we talk about the value of open data, we mostly talk about how the public — citizens, academics, journalists, and businesses — will put data to work in new and creative ways. That’s great, but perhaps the most impacted audience is a little bit closer to home.
After all, who better to derive value from public data than the professionals who have a hand in compiling and using it on a daily basis?
Government employees spend huge amounts of time digging through budget books and extracting information from cumbersome enterprise financial systems. By making their finances open, government agencies can streamline the process of finding and analyzing data — saving staff time, system resources, and ultimately, money.
While there are many ways that governments unlock this value through use of their financial data, three of the most important are breaking down operational silos, streamlining public records processes, and finally, creating “living” financial reports for managers and policymakers.
- Breaking Down Silos
Government agencies spend a lot of time tracking and recording data. This is especially true around finance — from procurement, financial reporting, and the budget to forecasts, contract spending, inventory management, and so much more.
Whether it’s a spreadsheet or an enterprise system, all this information is being tracked somewhere — but how many people across a given organization know where all of those individual data points are, or how to access all of them? Typically, the answer is very few.
This means several things, none of which are good. First, a huge amount of time and money is spent creating reports and moving data across departments, across levels of government, or even from one cubicle to another.
Second, it creates significant delays in the process of management or policy development. Council members have to wait two weeks for a “report back” on critical issues, or managers having to wait days to see their budget v. actuals. If the desired data is held across multiple systems, it could take months, or simply be impossible to compile.
Finally, it means that the most important data is the most vulnerable. If only one analyst knows, for example, where the spreadsheet is that lists all the City’s grant awards and information, and he/she wins the lottery and doesn’t come back tomorrow — what happens?
In Los Angeles, a wave of key retirements meant that most of the institutional knowledge about the City’s 900+ special funds was lost — shrouding the spending rules for nearly $6 billion in secrecy. By creating a “public system of record” of fund balances and eligible uses for special-purpose funds, Los Angeles was able to preserve that critical data into perpetuity, and give policymakers and managers direct and easy access to this critical information.
- Streamlining Public Records Processes
Every government has an obligation to respond to requests for information from media and the public. These reports can be costly to produce, and can come with challenging legal questions about the preservation of confidential information.
By becoming “transparent by default,” governments can not only reduce the number of requests and make it cheaper and quicker to respond to them, but can also better manage confidential information.
Sounds counterintuitive, right?
By addressing all of the agency-wide privacy concerns all at once — Did you remember payments to whistleblowers? Travel reimbursements for City employees? Summer camp counselors who may be minors? — governments can ensure that their open data meets the most stringent privacy requirements, then simply use those reports to answer other public records requests.
If an unusual request requires a different report than the data posted to the open data portal, it can still be informed by those same privacy rules, which are now documented and explicit to anyone who is responding to the public or media.
Overall, Socrata customers (including states, counties and cities) report a decline in public records requests that require a new report to respond to. In fact, many use those public records requests as a “suggestion list” from the public for what data to put up next.
- Creating “Living” Financial Reports for Managers and Policymakers
Every public entity also has a basic responsibility to report its finances in a way that is understandable and digestible for the public. Without going into the obvious issue there, how many citizens are truly able to understand a budget book or a Comprehensive Annual Financial Report (CAFR)? Producing hard-copy, static reports is an inefficient allocation of resources, undermines public administration, and makes it more difficult for civil servants to do their jobs.
Governments already spend significant time and resources producing financial reports — both annual CAFRs and legally-required reports and annual, monthly, weekly, and daily reports that drive decision making and resource allocation agency-wide.
Instead of sending each manager a monthly PDF with their budget vs. actuals, agencies can create live, dynamic dashboards that puts that data at their fingertips. Instead of annual reports on collections, governments can track their collections and their progress towards revenue targets in real time.
By making these reports live and accessible, governments can empower their employees and managers to effectively safeguard public funds and deliver the maximum impact for each tax dollar. They also give managers insight into other departments within their agency to learn about new practices, discover new vendors, and break down barriers between agencies.
Just think — around the world, leading businesses are investing billions of dollars in cloud-based IT and in new data management and analysis tools. Governments collect as much data or more than anyone. Why wouldn’t these tools be just as impactful for the public sector?
The potential of data to improve internal management — especially of financial data — is immense. These examples are just the beginning. As governments across the country begin opening their books and putting their financial data to work, innovative managers and analysts are finding new and creative ways to maximize the value of their data. They are creating new databases, streamlining processes, creating dashboards for managers, and using predictive analytics to uncover waste and fraud.
At Socrata, we are proud to help governments of all sizes drive the future of public administration. If you’re interested in learning more ways open data can aid your government and foster operational efficiency, join me on Thursday, September 17, for a webinar hosted by GovLoop, “Transforming Government Operations With Open Data.”