Guest Post from Robin Roberts

Baking a Cake in the Legislature

It has been said that creating legislation is an ugly process. It could be compared to baking a cake without a recipe with an Italian chef, a French Baker, a German Chef, and an American Baker, each with their separate ideas, ingredients, tastes and concept of the end product. This is how one could look at a piece of legislation that had its beginnings in 2004 and continues to be discussed, created and possibly introduced for the third time as the 2013 County Financial Management System. A Little history is needed to fully comprehend the complexity of this piece of legislation.

Formal accounting standards were developed and created after the stock market crash and during the great depression. These standards were established in financial reporting that would allow investors, lenders, and regulators to make decisions and prevent another crash and depression. Generally accepted accounting principles (GAAP) were established and private industries and governments with publicly traded financial instruments on the stock markets regulated by the Securities and Exchange Commission (SEC) were required to be audited and reported in compliance of GAAP. Transparency and uniformity were some of the goals to be achieved from the standards. The Financial Accounting Standards Board (FASB) was created to develop and maintain the standards.  In the 1970’s Governmental Accounting Standard Board was created to develop, adopt and enhance the standards that were unique to governmental accounting and reporting.

The Tennessee Legislature passed legislation in 1957 to assist in meeting the standards, provide uniformity, and efficiency in accounting for the funds of counties. This was the first legislation to centralize the budgeting and financial reporting of counties in Tennessee. This was a state law with local option of adoption by counties. Another state law with local option was passed in 1981, which enhanced the accounting and compliance of centralized accounting beyond what was contained in the 1957 law. Then in 2004 The University of Tennessee County Technical Assistance Service (CTAS) was asked by the Tennessee Comptroller to assist in drafting an act to be presented in the 2005 legislative session. The 2005 act was presented with mandates for counties to comply and not as an act with local option for adoption. Strong opposition from various officials was immediately presented to the Comptroller. The education lobby expressed the greatest opposition to the proposal and the bill was withdrawn.  This bill languished until 2011 when it was modified and represented as the 2012 County Financial Management System. It still contained mandated enactment over time. The Comptroller stated the bill was introduced to generate discussion and find the common areas to address to eliminate the opposition from the various groups. This is where the analogy of baking a cake comes to be. With each change of flavor presented or the final design it increases the level of opposition. Although, everyone recognizes the need for the desert to complete the meal, what each baker wants to deliver is different and they are not willing to accept the change in their concept. Each group of officials think their way is best, however the Comptroller charged with overseeing the standards for the counties and the compliance with accounting standards has not been able to sell his concept to their satisfaction. Knowing the state legislature has the ultimate decision as to the ingredients, they will be influenced by bakers (county elected officials) as to how they want their cake to look and taste. Interestingly, the elected officials within their own groups do not agree on what is best. When it is finally passed it will taste sweet to some and sour to others, and few will enjoy the icing.