State and local governments face some unique document retention challenges. One of the most stringent is the requirement by the Internal Revenue Service that documentation for tax exempt bonds be held for up to 33 years. Compliance also requires municipalities to safeguard documents proving how the money was spent. The result, says Cheryl A. Somers, assistant finance director for the town of Palm Beach, Fla., is a logistical headache that can include tracking as many as 5,000 pieces of paper for over three decades.
For Palm Beach, a town of 9,000 residents that swells with an additional 20,000 seasonal residents annually, the tried-and-true document management methodology was to keep hard copies. In 2003, the town purchased bonds to build a new fire station and in 2010 refunded the original bonds as well as issue a new one for a total of $70 million. “Each department had to retain and manage the documents for what they needed to hold. It was a cumbersome process,” said Somers.
The town clerk maintained any resolutions and ordinance pertaining to the bonds; the finance department held accounting documents and cancelled checks; purchasing held contracts; public works held construction documents, and so on. In other words, lots of filing cabinets and the hassles of off-site storage.
In 2007, Palm Beach acquired ERP software from Tyler Technologies originally for financial management, followed by the acquisition of a document management system from Laserfiche in 2008. A software component developed by Tyler Technology’s programmers allowed Chris Cartrett, the town’s document management coordinator, to bring the two platforms together.
Once the two systems were integrated, the town began scanning and capturing certain financial documents, such as accounts payable invoices, to create workflow programs that enabled staff to work in a digital environment. Eventually, in 2010, the town turned to the mammoth project of capturing and managing its bond documents.
Altogether, Palm Beach invested approximately $250,000 in the financial management software system and $104,000 in the document management platform, with additional annual support fees. Palm Beach’s annual IT budget is $1.867 million out of a general fund budget of $65.4 million.
The process of converting bond-related documents into digital form has progressed significantly, according to Cartrett, but there are challenges. Besides invoices and billing statements, the town has had to convert schematic and engineering drawings. Eventually, contractors and engineers will submit these specialized documents in digital format, but for now, the elaborate documents are sent out to be scanned and then imported into the system.
Surprisingly, technology has not been used significantly by other cities and towns to manage their tax exempt bond documentation, despite the IRS’s retention requirements. Laserfiche, which sells document management systems to state and local governments around the country, was not aware of other municipalities that had used their technology to manage bond records, according to Katie Burke, Laserfiche’s government program specialist. The municipal securities market is huge, worth nearly $3.7 trillion, according to the Securities and Exchange Commission.
Now that Palm Beach has been able to bring technology to bear on its existing bonds, the town just issued another bond in December 2013, giving Somers and her staff a new challenge in the months ahead. “It’s going to be more of the same,” she said.