Proposed: Finance Management Act

[Brian Livingston]

Hi all:

The following is a piece of legislation I have drawn up to update the manner in which our finances are managed. Currently, we rely heavily on our treasurer to perform all financial tasks. This is both a incredibly large burden to place on one person and a problem if anything were to happen to our esteemed and highly-skilled treasurer. In addition, as we grow and our finances become more intricate, it is increasingly important that we have several members of the community who have a detailed working knowledge of our finances to assist in our short term and long term planning .

The main points of this bill are:

• *It creates a standing committee under the Executive branch of three people, headed by the treasurer.
  *The Committee is responsible for all financial tasks related to the CDS.
  *This bill does not change the Treasurer's key responsibilities; he or she is the only person who can accept or distribute funds from the CDS treasury.
  *Members are nominated by the Chancellor and confirmed by the R.A. To ensure impartiality, once confirmed, members may not be repealed (similar to the Federal Reserve).
  *A representative of the board is now required to attend the third RA meeting of the month to present a financial overview of the CDS and answer related questions.

This bill should create a much more dynamic, accountable management system for the CDS and I do look forward to any comments you may have, as it is still in a draft stage.

Thanks!

Brian Livingston

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Proposed: Finance Management Act

Purpose: Since our founding days, the C.D.S. and its prior incarnations have had highly skilled assistance in managing its growing finances, both on a day-to-day and long-term basis. However, as we grow, it is increasingly important for this important responsibility is shared amongst a committee of appointed citizens. This change will increase accountability and community participation, create a series of redundancies, and increase the options available for a financially healthy C.D.S.

Bill:

Upon passage of this bill, the Chancellor or an appointed aide shall constitute a Financial Management Committee, made up of three C.D.S. residents, headed by the C.D.S. Treasurer. The Financial Management Committee will be an entity of the Executive branch and is assigned the responsibility for overseeing all aspects of C.D.S. finances. The scope of this responsibility includes: monthly financial reporting; providing guidance regarding proposed expenditures; long-term financial planning; other finance-related requests made by the R.A. or Chancellor.

Candidates for the Finance Membership Committee are nominated by the Chancellor and confirmed by the R.A. with a simple majority vote.

At the third R.A. meeting of each month, a representative of the Financial Management Committee will provide a financial report to the R.A., providing an overview of C.D.S. finances and answering relevant questions posed by the R.A.

The Finance Management Committee is responsible for determining appropriate meeting protocols, but is required to post a summary or log of all meetings to the C.D.S. wiki.

[Jon Seattle]

1. Are the members of the finance committee considered civil servants under the Civil Service law?

2. Can members of the finance committee be replaced by the Chancellor? By the SC in case of misbehavior?

3. Is the Chancellor repressible for Finance Committee's official actions?

I think this is a great idea, but I do want to make sure it keeps in place the checks and balances we have in place in the constitution.

[Jon Seattle]

*Members are nominated by the Chancellor and confirmed by the R.A. To ensure impartiality, once confirmed, members may not be repealed (similar to the Federal Reserve).

I like the idea of the finance committee, I think it moves us in a good direction in terms of setting up the infrastructure we need to grow. Its the US citizen in me, but I get nervous every time someone suggests that the CDS have appointed-for-life officials. My european friends point out often, that is does not matter so much, as long as there are sufficiently strong checks on their actions from elected bodies.

Early on in my software development career I spent several years working for a Federal Reserve Bank of New York. We used to joke that there were edicts from management, those that came from the Federal Reserve president, and some that came from the US Congress. The US Congress requirements were the strongest as you could be put in jail for not implementing them correctly!

Few people know this outside of the US, but the US Federal Reserve is not an executive agency. Since it is not part of the executive branch, it does not enjoy executive privilege. That means that the Fed and it’s employees can get in very hot water for violating any law that congress passes. The Fed is regulated by congress, and as a result there are very strong limits on its actions. It is also not the same organization as the US treasury.

In your bill the members of the committee are part of the executive branch. I am not sure from reading it what powers they have (if any) and what limits there are on those powers. Are they just aids to the treasurer? If so, the treasurer can appoint this committee herself without RA action.

Lets try this very hypothetical scenario. Some day in the future, because of serious financial problems, the CDS finance committee votes to sell AM to pay off our debts. Is there anything in your bill that would keep them from doing so without RA approval?

Best,

Jonathan

[Brian Livingston]

Jon:

I envisioned this committee to serve in an advisory capacity, with no additional powers than the Treasurer is currently granted. In the hypothetical scenario, the situation would play out the same as it would today. The committee can vote to recommend the sale of AM, but the RA needs to vote to approve the sale. Just as the treasurer cannot presently sell off CDS assets without authorization, the same would hold true with a committee.

As for the appointment for life, this is a point that admittedly I've thought about and changed my mind several times. On one hand, we need to make sure that the members of the committee aren't politicized by having to risk being recalled by the R.A. due to an unpopular vote. On the other hand, I can see several instances that removing a member would be necessary (ie, the member stops showing up, proposes or engages in unethical actions, etc.) It is a tough call, although I came to the current language upon setting up the committee to serve as an advisor to the Executive branch.

If you have any thoughts on possible ways to refine the bill or to address the necessity for independence vs accountability, I would love to hear them. I want to be sure that when this bill is presented, it is as strong as possible and does not diminish or change any of the current checks and balances we currently have in place.

--Brian

[Sonja Strom]

This seems like a good concept. Thank you Brian for your work on it.

However, I also have a few thoughts:
1) Is the current Treasurer Sudane in favor of this? So far as I can tell she has been doing an excellent job.
2) Perhaps the 2 new positions could be called "Assistant Treasurer" to make it clear they are distinct from the "Treasurer."
3) Does the RA really want to have a Financial Report given to them in person each month? It seems to me the Financial Reports that have been posted in the Forums each month have given that information quite well. Questions can always be asked on an individual basis.
4) Would these be completely unpaid, volunteer positions?

[Sudane Erato]

1) Is the current Treasurer Sudane in favor of this?

Please forgive my tardiness in commenting about this... {excuses... excuses...}.

I am very much in favor of this. I will point out that over the years I have several times proposed this kind of structure for the management of our financial responsibilities... but to this point in time, nothing has been approved. The fact that this issue has now surfaced again, with I sense a rather broad consensus among the factions, makes me extremely pleased. I will welcome having a structure like this in place.

We are a community of peers with issues of concern to everyone to manage... among those the very significant one of our money. We now own 3 sims valued at US$1675 apiece, we have a financial commitment to LL of US$685 per month, and we have almost US$5000 in our bank account. These are real numbers. At some point it is essential that we migrate from the "comfortable" arrangement where one "trusted individual" administers all this and assures everyone else that all is well; to a growth-oriented arrangement in which an agreed upon and trusted system designates accountable individuals to manage the money on the community's behalf. Sure, it would be great if we could institutionalize a permanent "mother". But "mother" is a human being like the rest of us, and she points out that sooner of later the community grows up and takes on these responsibilities in the way its taken on its other responsibilities. Sure... many might say that we perform these with a great deal of chaos and disorder. *shrug*... Of course. We're a newborn democracy... messy as can be. But the requirement to "grow up" remains. So, yes, i support this movement very much.

I also point out that many of the intricacies of bureaucratic structure (who appoints who?, for what term?, how are they removed?) are not my strength, so that my ability to comment upon the various proposed structures may be limited. I think I can be supportive of any system that receives a strong community mandate.

That said, there are certainly operational issues which I can comment about.

1) The need for closed meetings. Brian has proposed that meetings either publish logs or summaries of all meetings, and I can live with that. But if the final law setting up the Finance Committee prohibits any kind of closed meeting, then its clear to me that meetings will evolve into informal communications where no records are kept at all. There are (a) issues of technicality which are neither necessary nor suitable for the public at large to be privy to, and (b) there are issues of confidentiality regarding individual citizens "accounts" with the Treasury. Surely a hue and a cry would be raised if all US tax returns were required to be public record. Money issues for the CDS also require some responsibile confidentiality.

2) The need for freedom from political forces. I will not say that its an absolutely fixed requirement that members of the committee be appointed for life... the mechanism for this is up to the RA. But I will point out that the CDS is an *extremely* volatile society. I would only propose for your consideration the question... do you want the management of your money to be subject to the same volatility as other topics of concern are in our affairs? I would suggest that a certain level of isolation from the political give and take would be an important factor.

There may be other operational issues that arise from considering this new legislation, and I'll be happy to comment. But, I must say, that overall I am thrilled that a proposal such as this seems to be achieving broad consensus, and I thank Brian especially for being the first to get it on the table.

Sudane..........................

[Jon Seattle]

I envisioned this committee to serve in an advisory capacity, with no additional powers than the Treasurer is currently granted. In the hypothetical scenario, the situation would play out the same as it would today. The committee can vote to recommend the sale of AM, but the RA needs to vote to approve the sale. Just as the treasurer cannot presently sell off CDS assets without authorization, the same would hold true with a committee.

As I said I very much like this idea. It makes sense to me for finance committee members to be appointed by, report to, and potentially be dismissed by the treasurer, since she will have to take ultimate responsibility for their actions, and is accountable to the larger CDS government.

2) The need for freedom from political forces. I will not say that its an absolutely fixed requirement that members of the committee be appointed for life... the mechanism for this is up to the RA. But I will point out that the CDS is an *extremely* volatile society. I would only propose for your consideration the question... do you want the management of your money to be subject to the same volatility as other topics of concern are in our affairs? I would suggest that a certain level of isolation from the political give and take would be an important factor.

This concerns me a bit. I would like the management of our money to be under a system that is accountable to the stock-holders (the Citizens of the CDS). Our way of doing that, at the moment, is through our elected representatives in the RA.

The finance committee could claim to be more stable than the RA only if it was able to say no to RA-passed bills. In other words if it had a veto. My reading of Brian's bill is that it does not create a body with the power to override RA decisions, and cannot stop or slow anything the RA decides. Only the Chancellor and the SC have that power.

[Brian Livingston]

Jon, again, some well-made points.

I can see two different visions of this committee forming, each with a different set of responsibilities and powers. The first would truly serve in an advisory role, assisting the Executive branch and providing financial opinions to the RA. I could see having these members appointed by the Treasurer, as they are solely advisors. However, I would like to have the extra check of having the confirmation of these appointments done by the RA. This would provide the RA a chance to ensure the committee is filled with the best possible candidates.

The second vision seems to be of a committee with the ability to veto RA bills on financial grounds. A committee with this ability would certainly need to have strong checks against it, including a veto override provision similar to (or even weaker than) that of the Chancellor, and an ability to remove members for improper behavior, the definition of such behavior aside. Presently, I am not in favor of empowering this committee with a veto power, instead relying on the Chancellor to act upon the suggestion of the committee and veto a bill if needed.

So, if we were to institute the first vision, it seems that the selection and appointment procedures would have to be tweaked, moving the appointment responsibilities from the Chancellor to the Treasurer. In addition, I plan on adding a provision barring current members of the RA, SC, and Executive branch (except the Treasurer) from serving on the committee.

--Brian