5 Ways to Not Waste Stimulus Finds With Mark Funkhouser

Tyler Podcast Episode 26, Transcript

Our Tyler Technologies podcast explores a wide range of complex, timely, and important issues facing communities and the public sector. Expect approachable tech talk mixed with insights from subject matter experts and a bit of fun. Host and Content Marketing Director Jeff Harrell – and other guest hosts – highlights the people, places, and technology making a difference. Give us listen today and subscribe.

Episode Summary

With the American Rescue Plan Act, local government is seeing opportunities to address some of the challenges they are facing brought on by the pandemic. But what’s the best way to use these funds? How do you make sure to best leverage this unique opportunity with both short term needs and long term priorities in mind? Well, to help us understand this, we turn to Mark Funkhouser. Mark Funkhouser, is the president of Funkhouser & Associates, and is a municipal finance expert and former mayor of Kansas City who has served as a government official, elected leader and publisher of Governing magazine. He is a trusted and credible advisor to government officials who is uniquely qualified to help them put their communities on the path to fiscal sustainability. Mark has a master’s degree in social work from West Virginia University, an M.B.A. from Tennessee State University, and an interdisciplinary Ph.D. in public administration and urban sociology from the University of Missouri at Kansas City. Today, Mark brings us 5 ways to not waste your stimulus funds.

Transcript

Mark Funkhouser: Well, after you've had the conversation with the community, the stakeholders, the citizens, your own employees, the other governments in the region, you need to map out the whole thing from now till December 31st, 2024. This is what we're going to do this month and then this is what we're going to do the next month and so forth, so that people see the whole path, and you're spread the money out, or at least the effort out, over the whole time.

Jeff Harrell: From Tyler Technologies, it's the Tyler Tech Podcast, where we talk about issues facing communities today and highlight the people, places, and technology, making a difference. I'm your host, Jeff Harrell. I'm the director of content marketing for Tyler, and I'm so glad you joined me.

Jeff Harrell: Well with the American Rescue Plan Act, local government is seeing opportunities to address some of the challenges they are facing brought on by the pandemic. But what's the best way to use these funds? And how do you make sure to best leverage this unique opportunity with both short-term needs and long-term priorities in mind?

Jeff Harrell: Well, to help us understand this, we turn to Mark Funkhouser. Mark is the President of Funkhouser and Associates, and is a municipal finance expert, and former mayor of Kansas City. He has served in local government as a government official, an elected leader, and has been publisher of Governing Magazine. He is a trusted and credible advisor to government officials and is uniquely qualified to help them put their communities on the path to fiscal sustainability. Mark has a lot of letters after his name. He has his Master's degree in Social Work from West Virginia University, an MBA from Tennessee State, an interdisciplinary PhD in Public Administration and Urban Sociology from the University of Missouri at Kansas City. Well, today Mark brings us his five ways to not waste your stimulus funds. Without further ado, here's my conversation with Mark Funkhouser.

Jeff Harrell: Well, Mark, really excited for you to join us. Thanks for being here.

Mark Funkhouser: Oh, I'm happy to do it. Thank you for having me.

Jeff Harrell: Absolutely. And I think I want to start with talking about why, we're going to talk about not wasting your stimulus funds, but wanted to talk about, why is this such an important topic for government leaders right now?

Mark Funkhouser: Well, this is a once in maybe several generations opportunity for local governments to invest. The American Rescue Plan has literally billions of dollars coming to local governments. They may never get an opportunity like this again. This is a chance to really make things work well for your constituents.

Jeff Harrell: And do you anticipate other funds coming this year or are most people expecting this to be what they get for the foreseeable future?

Mark Funkhouser: I think that there will be a major infrastructure package. Speaker Pelosi says that that will happen in August. The fight about the infrastructure package is how to pay for it and I don't know how that fight will be resolved. It will happen. There will be a big infrastructure package. The President proposed 2.3 trillion. I don't know what it'll be, but it'll be a lot.

Jeff Harrell: Oh, you wrote a really great blog on your website. And what we want to do is dive into that a little bit today. So we're talking about the five ways to not waste your stimulus funds. And the first way you say is don't misapply a temporary windfall. What do you mean by that?

Mark Funkhouser: Well, one of the real big problems in government, in local government, is to take one time money and spend it on an ongoing thing. For example, use the money to hire a bunch of additional police. What are you going to do when the money goes away? So it's like the number one sin, do not use one time money for an ongoing program.

Jeff Harrell: Any examples of maybe where you've seen that being done across government?

Mark Funkhouser: Oh, sure. You used the money to, well, for example, I've heard several folks say they're going to hire more police. There's been a big upsurge in violent crime, especially homicide, during 2020. But the problem with that is what are you going to do? This money goes away in 2024. And what, you're going to lay off all those police? The other kinds of things that people do is build a new facility, build a new community center, with no plans to cover the operating costs. And over the life cycle of a facility, the operating costs are at least equal to the construction costs. So that sort of thing and it happens surprisingly often.

Jeff Harrell: So don't sink money into something that's going to continue to cost you money beyond this temporary windfall that you get?

Mark Funkhouser: Exactly. What you want to do is use the money to reduce your operating costs. For example, in the community center idea, if you have a community center that has huge maintenance issues and has been sort of an ongoing sinkhole of money, maybe the thing to do is to build a new one, but plan to cover the operating costs out of the same operating budget that you used before. There are lots of opportunities where governments could invest in new equipment. For example, say you have trash collection as part of your government's function, and you use the traditional trash truck with the two guys running along, throwing bags in, and one guy driving. It's a lot cheaper in terms of operating costs to use what are called semi-automated trash trucks, which often just have a driver. So you're reducing the operating cost, but there's a huge upfront cost to retrofit your entire fleet.

Mark Funkhouser: And a lot of governments are stopped from doing the kinds of things that they need to do because they literally don't have the working capital and if they borrow the money, then they've got the operating, they've got the debt service. And so here's a place where the math works. There is no debt service. Somebody gives you the money. So that's the situation, as you can use that money to reduce your operating costs, and so it basically pays for itself over the long run. And again, there are lots of places where, for example, if you could in invest in significant amounts of training and cross train your folks so that they can do more, but that training costs money. But once they're trained, then it goes on more or less forever. So those are the situations where you want to look at, "If I had X dollars, could I reduce my operating costs?"

Jeff Harrell: That's great. And you're one step ahead of me. So that was number two. That was actually the second reason, invest some of your money to reduce operating costs. The third one I'm intrigued by. You say think beyond your borders. What do you mean by that?

Mark Funkhouser: Well, there are lots of situations where the region needs an investment, maybe an investment in transit, but it covers multiple jurisdictions. All those jurisdictions are going to get some money. And so American Rescue Plan money literally goes to every jurisdiction, unlike the CARES Act, which only went directly to governments over 500,000 people. So if you're looking at say the Kansas city metropolitan region, there are things that the region would like that would make it better able to compete with other regions across the country. But no single government can really afford to make the investment, but if they pool their resources, they can do things as as a region that they otherwise couldn't do.

Jeff Harrell: I love that. Any examples? I know when you were mayor of Kansas City, any examples of where you worked with jurisdictions outside of your area?

Mark Funkhouser: Well, yeah. So we formed a metro caucus of mayors where we got together as a group and talked about the kinds of things that we needed to do. One of the things which we were trying to do was an upgraded transit system, a multimodal regional transit system as the Kansas City Metro has three different transit systems and none of them are well funded. It would take a significant amount of upfront money to do that.

Mark Funkhouser: But there are others, where each region has sort of its own unique problem. And they probably have been talking about it for a long time, but who's going to pay what and that sort of thing. And a lack of available upfront cash. A lot of governments just barely had recovered from the previous Great Recession when the COVID pandemic happened and the economic turmoil with it. So things have been put on hold in terms of investment. And now you can get together as a group and talk about what you want to do. And there are lots of homelessness. What if you invested in shelters and so forth for homeless? Those are regional issues.

Jeff Harrell: So think beyond your borders is number three. The fourth one, you say make overdue investments in technology and cybersecurity.

Mark Funkhouser: There was a piece news item that just came out the other day of a small rural water system in Kansas where a disgruntled former employee had, a year or so after he had left their employment, used his cell phone to turn off their disinfectant and decontamination system and put at risk several thousand people. In the discussion of that article, it was in the Kansas City Star, the broader issue, rural communities and rural water systems that have not made investments in cybersecurity. And there's an interesting situation because using the technology, the technology investment is exactly the kind of investment that could reduce your operating costs, but it carries with it the risk of that sort of thing, the cyber risk. And so you have to invest, but you also have to be careful. And a lot of those smaller jurisdictions have not had the opportunity.

Mark Funkhouser: One guy was quoted in the story as saying, "Yeah, we can hire an IT guy if he can also drive a snow plow and patch potholes and so forth." So there's that issue. And governments have been real laggards in investing in technology. But then COVID happened and the pandemic happened and they suddenly found that they had to move a lot of stuff to the cloud, or if they had already moved to the cloud, they were a lot better off, have to do virtual meetings, remote work, all that sort of stuff. So the pandemic was a real wake up call for governments that they need to invest. And now here with the American Rescue Plan there may be opportunities to finally do that with a careful plan, as opposed to in the middle of a crisis slap together what you can. But, again, there's this sort of dual edge thing. You almost have to invest in the technology and COVID showed you that you need to do that, but if you're going to invest in the technology, you also have to be really aware of cybersecurity issues.

Jeff Harrell: Mark, do you think, I know that you said COVID helped, was kind of a wake up call to government and let them know they need to, do you think it also highlighted where they need to? Because they're suddenly forced to do business differently. Do you think that also illuminated the areas where they really need to dive into an investment in technology?

Mark Funkhouser: I have heard in discussions which I've had with the local governments, a wide variety of areas. I mean, they need to be able to do, for example, revenue forecasting, and budget issues, and they need to be able to do it with staff working remotely. And, frankly, with fewer staff. They also need to be able to issue permits and so forth online, and they need to be able to hold virtual meetings online, and they need to be able to do it in a secure environment where you're not getting sort of Zoom bombed and so forth. Jeff, there has been, I don't think there's a single area of government that I haven't heard of technology issues.

Mark Funkhouser: I mentioned the water wastewater stuff. There's obviously issues for local governments that run their own gas and electric utilities. I mean, we just saw that huge storm that hit Texas and Mississippi and so forth. There's obviously upgrades there to be able to handle that stuff. So across the board, literally every area of government, I think there needs to be investment in technology. And I think government folks know that now. It is, even to the extent that they knew it before, freeing up the cash. I mean, getting a new ERP system is an expensive process. All that sort of stuff costs money and going to your City Council or your County Commission and saying, "I want to borrow X million dollars so that I can upgrade our financial system," as opposed to build to something that they can cut a ribbon on and so on, that's a tough sell. But now in this environment, you got two things going for you. One, they've seen how critical all this is, your elected officials have seen you need to be able to do this, and the feds have made the money available.

Jeff Harrell: Well, we're down to number five, spend some of your stimulus funds on social services and small business to avert short term disaster.

Mark Funkhouser: Yeah. And there's going to be tremendous pressure to do that. I've heard mayors say, "Oh, we're going to put this money to work, in the community, help small businesses that are at risk of closing and so forth, and address a lot of the social problems." Usually through nonprofit, social service agencies, and so forth. And some of that needs to be done.

Mark Funkhouser: But if you spend significant amounts of your money doing that, those small businesses and social service issues are still going to be there years from now, three years, four years, five years. So you want to avert people going under and there's a domino effect. Several businesses go under, the folks who were their suppliers go under, the folks who were using their payroll to pay for other stuff. So you want to avert that, but it's as important for your businesses that the infrastructure work well. For example, there's nothing like a water main break in front of your restaurant to really screw things up. It has to be safe. And so you're actually helping business when you make the government run efficiently and effectively and equitably.

Jeff Harrell: Mark, any parting thoughts for government leaders out there as they think about this topic around stimulus funds and how to use them?

Mark Funkhouser: So, for so long governments have been patching things together and trying to figure out how to fill the last budget hole and so on. And now is the time to take your time and think this through. But now is the time to talk to your colleagues. I mean, unlike the CARES Act, which basically had about a 11 month window, spend the money and it's gone, this has three years. Use that time. Talk to your community. Don't let the money burn a hole in your pocket and don't spend it all in one place. The same thing, same advice, your parents gave you when you got your first job.

Jeff Harrell: I was going to say that sounds familiar.

Mark Funkhouser: Now is the time to think carefully, collaborate with your other governments, listen to your citizens. I mean, I would convene various kinds of citizen listening things and let people know, they know you're getting this money, let them know what your thoughts are about how to best use the money, listen to them, and make decisions that hopefully you got a fairly broad consensus. And then of course be extremely transparent. Once you've told them what you're going to do, then you need to be able to show them every day, every week, every month, "We said we were going down this particular path. Here's how we're going down that path."

Jeff Harrell: Very wise words for someone who's been there. Mark, give us an update on what you're up to these days.

Mark Funkhouser: In my work, basically what I do, is talk to city managers, finance directors, HR directors, county executives, county commissioners, and I ask them, "What are your priorities? And what are your challenges? What are you working on?" And I do that. I love doing that. Those are my people, so to speak. That's where my real passion is, is in local government. And then I work with private sector companies to help them understand where the priorities and challenges and so forth are that local governments have and how to fit their solutions to those problems.

Mark Funkhouser: In some respects, my company, we serve as sort of matchmakers, where we take private sector solutions and we match them with public sector problems and we inform each about the other. We tell the public sector folks, "Hey, you could do this." And we tell the private sector folks, "Hey, these are the kind of challenges these folks are facing. And here's how your stuff, your solutions, your products, fit with those challenges."

Jeff Harrell: So Mark, any advice in terms of process or a path someone could take to as they think about or plan out how to use these resources?

Mark Funkhouser: Well, after you've had the conversation with the community, the stakeholders, the citizens, your own employees, the other governments in the region, you need to map out the whole thing, from now till December 31st, 2024. This is what we're going to do this month and then this is what we're going to do the next month and so forth, so that people see the whole path and you spread the money out, or at least the effort out, over the whole time so that they don't ask, "Well, six months in, where are we?" You're told them what the path is and then you show them how you're moving down that path.

 

Jeff Harrell: Well, Mark, really appreciate your wisdom. For someone that's been a mayor and someone now is talking to officials now, you really got, I think, your finger on the pulse of what's going on in local government. If someone wanted to connect with you, what's the best way for them to do that?

Mark Funkhouser: They can send me an email mark@mayorfunk.com. They can go to our website, mayorfunk.com. We've got a newsletter. They can sign up for the newsletter. That's what prompted this particular conversation, is one of those newsletters. I'd love to have them be part of our growing community.

Jeff Harrell: And as a marketer, I love your website name, mayorfunk.com. If you can't remember that. Well, Mark, so thrilled for you to join us. Thank you so much again for your wisdom. I will put these five ways in the show notes for the podcast episode. Again, thanks so much for joining us.

Mark Funkhouser: Well, thank you for having me. A lot of fun.

Jeff Harrell: Well, thanks, Mark, for your wisdom and insight. And as mentioned, I will add the five ways in the show notes of this particular episode. Remember we have a new podcast episode dropping every other Monday, so please subscribe. Again, this is Jeff Harrell for Tyler Technologies. Thanks again for joining me. We'll talk to you soon.