Lawrence City Commission to consider budget amendment that includes $4.7M toward new financial software system
photo by: Mike Yoder
Amid recurring accounting issues in recent years, Lawrence city leaders will soon consider a budget adjustment that includes an approximately $4.7 million addition for a new financial software system.
As part of its meeting Tuesday, the Lawrence City Commission will consider the 2021 third quarter budget amendment, which would result in a net increase of about $5.7 million and includes spending of some grant funds. The largest component of the budget adjustment is an approximately $4.72 million addition for the new finance software, which city officials have said is needed to address bookkeeping issues that have been identified in outside audits of the city’s finances in recent years.
As with the 2018 and 2019 audit reports, the recently completed 2020 report found the city had a “lack of internal controls over financial reporting,” meaning that the city’s processes for tracking its cash, assets and liabilities weren’t reliable enough to ensure that the city had accurate financial records, as the Journal-World reported. Auditors have had to make significant adjustments to the city’s books each year before signing off on them as being accurate and ultimately giving the city an “unmodified opinion,” or a clean audit, according to documents the city has provided to the Journal-World.
Auditors have cited record-keeping errors, turnover in the city’s finance department and problems with the city’s financial accounting system as contributing to the issues. For instance, the system requires city staff to do workarounds that auditors say open up the city to risk. The city issued a request for proposals in November 2020 for the new software system, and commissioners received presentations from vendors and an outline of the anticipated costs as part of their meeting last week.
The city’s new enterprise resource planning system will include financial management components such as general ledger, accounts payable, accounts receivable, purchasing, grant management, capital projects and budget management, according to the project plans provided to the commission. The system will also include human resources components, such as benefits and payroll, and community development components, such as land use, planning and code enforcement. Consultants with the firm BerryDunn led the city in the proposal process, which included 13 potential vendors.
The financing plan for the new system has both upfront and ongoing costs, and it calls for revising the 2021 budget by $4.717 million to pay for data migration, one-time implementation costs and first-year subscription fees for the new system, according to a city staff memo to the commission. The memo states that temporary notes in the amount of $3.917 million will be issued and paid back over the course of seven years, and the remaining $800,000 will be paid for with available cash already reserved for the project. The ongoing subscription fees and repayment costs are included in the city’s 2022 budget and will be included in future budgets.
The project plan includes several anticipated benefits of the new system, including improved access to data and more robust reporting; reducing the current reliance on manual and third-party system workarounds; and providing improved training resources for both frequent and infrequent system users.
Because of financial uncertainty in 2020 related to the coronavirus pandemic, the commission passed a “placeholder budget” for 2021 and anticipated making quarterly adjustments. The commission has previously discussed other adjustments included in third quarter budget amendment, such as additional spending for the Burroughs Creek Splash Park project. The memo states the $5.7 million amendment will be offset by unanticipated revenues, prior-year fund balance and/or savings found throughout the year.
The Lawrence City Commission will meet virtually at 5:45 p.m. Tuesday, and some staff will be in place at City Hall, 6 E. Sixth St. The public may attend the meeting in person at City Hall or participate virtually by following directions included in the commission’s meeting agenda, which is available on the city’s website, lawrenceks.org.