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Asset and Financial Management in 2010
Fast Forward
•Assets are managed on a full life-cycle basis
•Fully integrated online procurement, inventory, distribution, surplus and budget systems
•Surplus property is sold online
•A public corporation has been established to manage the state’s land and buildings holdings
•Reverse auctions are used to procure certain goods and commodities
•Reduced inventory due to use of just-in-time delivery
•Increased use of public/private partnerships to manage assets
•Maintenance forecasting of capital assets
•Full-cost accrual accounting for all funds
•True costs of delivering public services – internal and external – available on the Web
Feeding and housing 50 troubled teenage boys is not a job for the fainthearted, which is why Barbara runs a Texas Youth Commission halfway house in rural Texas. When she needs supplies—anything from pens and paper to groceries—Barbara can’t afford to spend much time keeping lists and tracking order shipments. Instead, Barbara calls up the state’s purchasing Web site through her wireless personal digital assistant (PDA) and orders anything she needs, assured that every item is at the lowest possible cost and, best of all, can be delivered to the ranch by the next morning. She can even pay for the goods electronically as they arrive at her door, and use her PDA to scan barcodes on the items to ensure that the order is complete. Barbara doesn’t have to make separate entries in her accounting, budget, and inventory systems anymore, because the system does that for her. In fact, the state’s purchasing system is beginning to tell her when she’ll be needing supplies. This system allows Barbara to manage both her budget and a houseful of raucous, hungry teenagers at the same time.
Arthur squints into the morning sun, watching carloads of early shoppers fill the state’s warehouse parking lot in Amarillo. He’s not too surprised, because today is the state’s semiannual “Texas Trash and Treasure” garage sale and silent auction held at each of the state’s four remaining warehouses in Austin, Dallas, Amarillo and El Paso. All the state’s surplus office equipment, boat engines, cement mixers, road graders—even livestock and beauty shop supplies—are for sale at a live auction and on an electronic auction Web site, where they could sell for a premium to a world-wide audience. When Arthur and his staff held the first of these sales, back in 2002, they netted more than $10 million. And clearing out all that old equipment allowed Arthur to close two of the three state warehouses he manages, saving the state $500,000 annually.
As the summer heat shimmers over Texas, Louise, a building systems director for a large health and human services agency, knows that every client and employee will be cool and comfortable. By touching a screen at her desk, she can see real-time performance data on every heating and cooling, plumbing, and electrical system in the agency’s 37 facilities across the state. If a system fails or needs maintenance, a computerized building monitor immediately sends notices to the wireless PDAs Louise and local maintenance crews wear on their wrists. The monitor will write out step-by-step work-order instructions on how to fix the problem, and record the maintenance crew’s response. If the crew notices another problem—even if it’s just a burned-out lightbulb—they enter it in the PDA’s “To Do” list for the day. The system has made Louise’s job a great deal easier and has saved the agency millions of dollars, while keeping it’s clients safe and healthy.
State Property Management Inc. President Sheila Bay is waiting in her home office for the day’s videoconference, to finalize a multi-million dollar land deal for the state. After months of negotiation, Sheila and her staff have put together a sale of some unused office space and open land in Austin and Houston that could realize $35 million for the state’s general revenue fund this year, and at least another $100 million over the next five years. Sheila’s employer, SPMI, is a public corporation set up in the first years of the 21st century to manage the state’s lands and buildings on behalf of all state agencies and institutions of higher education. Sheila has a personal stake in today’s deal: her salary, and those of her staff, depend entirely on their skills and the savings they bring to the state’s budget.
Jim, chief investment officer for an investment management firm created a few years into the new century, trades stocks, bonds, options, and mutual funds for the state’s $250 billion investment portfolio. Every day, Jim’s electronic trades shift hundreds of millions of dollars between funds, buying this, selling or auctioning that, for the state and its local governments. He has real-time computerized stock tickers from the Hong Kong, London, Toronto, New York, and Chicago markets on his laptop, his PDA, and his cell phone, so he can take immediate advantage in price swings and monitor breaking news concerning companies in his portfolio. Because his staff’s salaries depend on how much money they make for the state, everyone at the investment firm works hard to stretch every dollar. Since 2003, the firm’s investments earnings averaged, about 2 points more than the Dow Jones or NASDAQ indices.
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