Day: November 19, 2020

Knowing when outsourced accounting services can benefit New York local governments

COVID-19 and the resulting economic shutdown have been hard on local governments, and now may be a good time to weigh whether the trained eyes of outside accounting services can help put your Town, Village or City back on track.

In the best of times, officials in New York’s cities, town, villages, and counties have had to keep careful watch over spending. The pandemic, which brought budget cuts and state aid holdbacks, also brought along with cost-cutting measures to many municipalities. That included trimming staff through early retirement incentives, layoffs, and furloughs.

Did your municipality lose institutional knowledge when staff took retirement? What will it cost you to hire a new person, one with solid knowledge of the ins and outs of government accounting and bookkeeping, which is so different from commercial bookkeeping, to guide you through these tough times? Would hiring an outside consultant for accounting, one who specializes in government accounting, be more cost-effective?

The first thing for a municipality to consider when deciding whether to outsource this service to an independent accountant is the real cost of hiring a new full-time employee. In addition to salary, the municipality also bears the cost of medical benefits, as an employee and also as a future retiree, besides making payments into a pension fund.

For some municipal leaders, the initial reaction might be that they may prefer to have “a person in a seat,” someone in the building, who they can talk to directly. But if the pandemic has taught us all one thing, it’s how easily we can use Zoom or other video meeting programs for instant or near-instant virtual conversations. With one quick emailed meeting link, a mayor or supervisor can have an in-depth discussion, face to face via screen, with his or her accounting professional. That might have seemed unthinkable a year ago, but now virtual meetings are a staple of our professional, governmental, and personal lives.

And, of course, a consulting accounting firm could still have someone make on-site visits to the local government.

The outsourcing arrangement can free up the local government’s office staff to handle everyday cash transactions, receipts, and general bookkeeping, which can also improve their services to the public.

An outside accountant who specializes in governments can help the municipality identify ways to do things more efficiently and can help officials look for more ways to control or cut costs while minimizing the effects on services for the public.

Such outside accounting services can also provide an independent look at the municipal operations from an internal control perspective. They can help identify weaknesses in cash controls and review bank reconciliations. While hiring an independent accounting service will not relieve your local government of the need for periodic audits, it can prevent surprises when the audit comes.

Your government accounting specialist can advise your officials and remind them what you need to do at various points in the year, as well as review your budget.

The appropriate consultant is not just an accountant; he or she can also function as your financial accounting advisor who can also help smooth over tensions on boards when disagreements occur because the accounting advisor is independent.

Local governments in New York looking for ways to weather the financial fallout of the COVID-19 pandemic have had to come up with a myriad of new strategies to cut costs without decimating services to residents. Outsourcing accounting services to an independent specialist can be another outside-the-box strategy that saves taxpayer money while providing expertise and credibility to municipal operations.

Breaking Through to the Next Generation

They say, “You don’t know what you don’t know,” and we think that phrase sums up the massive manufacturing generational gap we’re experiencing. Without an introduction to the incredible career paths that exist within this industry, many kids grow up without manufacturing on their radar. We want to help you change that.

Did you know the median wage of Hudson Valley Region STEM occupations is 70% higher than the median annual wage for all workers in the region? Beyond competitive compensation, we know the growth projection is enormous. In New York State, between 2010 and 2015, employment in core STEM job titles grew by 10.5% and over the same time period, the nation’s core STEM job count grew by 11.3%. But how do we appeal to this generation? To better engage youth, manufacturers should focus on how this field offers a dynamic, meaningful, and purposeful line of work built on creativity and critical thinking.

Imagine sitting in class as a 13 year old kid. Your teacher announces a hands on team challenge you can partake in with your friends to build and program industrial-size robots to play a field game for a prize. Sounds pretty cool, right? There are programs you may not be aware of (even you “don’t know what you don’t know”) that are introducing manufacturing in fun, innovative ways. Robotics programs are popping up all over the country, aiming to build foundational knowledge about STEM careers and break down the negative stigmas that often surround the manufacturing industry. In the last year, nonprofit FIRST generated over 320,000 mentor, coach, judge and volunteer roles, to meet growing student interest. Getting kids excited about a career that touches virtually every corner of life – from environmental improvements, to building better medicines, and simplifying everyday tasks – is the key to the industry’s future.

One noteworthy local initiative is the Rockland BOCES Hudson Valley Pathways in Technology Early College High School known as the Hudson Valley P-TECH program. It’s designed to engage students in grades 9-14 with hands-on, project-based learning. Local businesses are encouraged to get involved to enable Hudson Valley P-TECH to prepare students for the workplace of today and tomorrow. The Business Partnership Program connects students with professionals in their pathway by providing students with work site visits, job shadowing, field experiences and more. Monthly Mentor Lounge events focus on topics to develop professional skills. Business partners also work collaboratively with teachers to design industry challenges in which students solve real-world challenges facing the industry partner. The end result? Creating a more robust and skilled pipeline of a qualified workforce that will benefit our entire region.

Shifting the stigma is the priority. How can we get schools to embrace industry tools like artificial intelligence and virtual reality? By talking to our educators about ways we can help engage scientific minds. Peter Harris, the Director of Learning and Design for the Career Pathways Programs, encourages manufacturing professionals to connect with local middle school educators and offer facility tours or classroom visits to strengthen outreach. You can create a lightbulb moment for a student once they realize a passion like playing video games can be translated into learning an exciting and rewarding advanced technology such as robotics programming or virtual metal cutting. Harris describes a sense of relief, release and pride that overcomes the students who walk into BOCES technical centers. Establishing stimulating alternative pathways to success is the first step to break down traditional education barriers.

To bridge the employment gap we’re headed towards, we must increase awareness and change misperceptions about the industry through exposure to engaging content and hands-on experiences. By offering high school and postsecondary mentorships, you will be helping prepare students for challenging, rewarding and lucrative careers in manufacturing. After all, many of the same kids you reach out to today will become the future of the company you’ve worked so hard to grow. Together, we can change perceptions, one student at a time. Please share this article with colleagues to spread the word, and contact RBT CPA’s dedicated team to have a deeper conversation about youth outreach you can get involved in.

Bumpy Road Ahead for NY’s Public Works

If you’re a part of this industry, you know it’s a late cycle business. You work on a backlog, so you never feel an immediate slowdown, and there’s (usually) always a project in the pipelines. But this past spring threw a curveball no one could have anticipated or predicted. Now, we’ve experienced our fair share of economic slowdowns in New York. As an industry, construction crews came together and supported one another in the aftermath of 9/11. You braced yourselves and recovered after the 2008 economic recession. But COVID-19 has created one of the fastest economic slowdowns in history, it feels a lot like we were collectively driving 65 miles per hour down Route 84 and slammed on the breaks without warning. Hopefully, you had your seat belt on because ever since February we’ve all been in for a bumpy ride. Forward procurement hasn’t stopped altogether but it has greatly softened, so while the construction industry is still fairly busy right now, contractor’s backlogs are trending downward.

Sales tax revenue for local governments in New York State dropped 27.1 percent in the second quarter compared to the same period last year, according to State Comptroller Thomas DiNapoli. Sales tax collections from April through June totaled $3.3 billion, which was $1.2 billion less than last year. Regionally, New York City was clearly hit early and hardest by the pandemic and the effects have lingered longest, with more businesses still unable to reopen due to health concerns, and construction projects delayed or halted. New York City’s second quarter decline of 34.9 percent was the result of deepening declines in April (-23 percent), May (-32 percent) and June (-46 percent). Because the federal government postponed the income tax payment due date from April 15 to July 15, that the big bump of tax payments expected in April, which generally represent about 13 to 15 percent of state income taxes, won’t count toward this fiscal year but the following one.

So, with tax revenue down, we can anticipate state and capital spending cuts. Unfortunately, 2021 will likely be a slower year than 2020 for construction projects, and contractors will probably see some softening of activity as early as the fourth quarter, regardless of what part of the state your business is concentrated in. As one of the most dense urban areas in the world and as a revenue powerhouse, the economic health of New York City is often the largest indicator of what the rest of the state can anticipate. Our current concern is that a lack of a larger federal government intervention would lead to New York lagging behind other states in its recovery effort. The MTA needs a $12 billion cash infusion to offset losses due to the coronavirus. If the federal government doesn’t approve aid, massive cuts to staffing and service could be implemented as soon as November. On a local level, we are already feeling project cut backs, with local municipalities being forced to cut back spending because they need to shore up their budgets. As much as we wish we could, our state doesn’t have the ability to print more money: cue the federal government.

What now? We could take a page out of the history books and recreate a domestic program to stimulate the economy on a national scale. You might recall in the 1930’s President Franklin D. Roosevelt enacted The New Deal, a series of programs, public work projects, financial reforms, and regulations to respond to needs for relief, reform, and recovery from the Great Depression. While it’s unlikely that New York would get specific public works project money handed over, a national initiative isn’t out of the question. The New York City region generates 8% of total U.S. GDP. According to an analysis by SUNY’s Rockefeller Institute of Government, New York’s massive economy means the state sends $116 billion more in tax revenues to the federal government than residents receive in benefits and services. Consider also that this is an election year, and whichever candidate becomes president, passing a big infrastructure bill to improve crumbling roadways and bridges across the country would likely gain bipartisan support. While we are optimistic that a big infrastructure deal could get passed, regardless of how the federal government will choose to step in we have to think of this pandemic in terms of a massive natural disaster. The construction industry will feel the aftershock the virus leaves behind even after it recedes. Contractors need to adapt to this reality if they are to survive the storm.

A recent study ranking the worst state infrastructures in the country leaves New York on a rocky road. The study places New York seventh for worst infrastructure in the United States and assigns the state a D grade after putting up a score of 158 out of a possible 400 points. While the number of deficient bridges and roads in poor condition and the cost to update the water system are grim statistics to pour over, this could actually be a saving grace for public works projects over the next three years. Infrastructure issues don’t magically disappear and deterioration does not stop because of an economic slowdown. If the federal government wants to stimulate the economy, it can choose to invest in infrastructure and generate job growth. With interest rates where they are, the New York construction industry represents a prime candidate for a “new deal-esque” stimulus.

We are hopeful that the road we are traveling represents a shorter than historic dip ahead. A massive public works project boost could allow us to reimagine New York’s infrastructure, launch sustainable green technology and position our state for continued future success. We feel optimistic that while 2021 will present its fair share of financial obstacles for New York’s private and public construction projects, 2022 opportunities and growth will rise from the rubble.