A decision on the resident-sought financial investigation was delayed Tuesday while the council takes a week to review its options, which vary widely from the original quest for answers into the city’s hidden financial problems.
A new plan underscoring seven key areas of concern was presented.
The new price tag “out the door,” as Councilman Richard “Dick” Young put it, is about $394,000.
But what residents were promised from the audit and what they could get could be dramatically different.
Residents and some council members have demanded for more than half a year a thorough analysis of city finances, specifically to uncover any fraud, misuse or misappropriation of public funds.
Residents also demanded an explanation for the city’s problem years; what caused budgets gaps so serious that it required the consideration of closing a public library and cutting off public safety funds, among other extremes? And, why were the council and residents surprised to learn in June the city needed $8 million?
Red flags raised by the Daily Herald included city administrators’: frequent changes in finance director; taking money from the fund balance or savings account to pay for expenses; shifting money from funds paid by residents for specific purposes, such as trash service, sewer and water, to the general operating fund to eliminate debt or buy more; and expenses exceeding revenues for consecutive years from 2013 to 2016.
The Daily Herald noted a lack of transparency when some council members said that administrators failed to provide important financial information about spending and dire financial straits.
That played a role Tuesday night when Councilman Gregory Johnson spoke out against making a choice to spend money on the spot.
“I don’t feel comfortable making financial decisions if I don’t have the information prior to ... not just this item but every item,” Johnson said.
Mayor Jose Segarra was quick to redirect the councilman to the current item.
Ultimately, the council decided it would wait.
The council’s top pick to perform an audit is Houston-based McConnell & Jones – a public accounting firm that said the city could do without a forensic audit. The city is negotiating with the firm on a contract.
The firm provided the council a price tag for each item the firm would examine, many of which were years that had not raised red flags and would cost extra money. The firm’s items include:
– The firm’s proprietary planning and quality control process ($34,708).
– Capital outlays from fiscal years 2006-2016 ($62,492).
– Use of bond money from fiscal years 2002-2017 ($84,448).
– Interfund transfers from fiscal years 2010-2016 ($32,176).
– Pay increases from fiscal years 2014-2017 ($22,751).
– City/owner agreements from fiscal years 2002-2016 ($36,692).
– Private roadway ownership from fiscal years 2002-2016 ($41,773).
– Spending during post-recall period from November 2011 to May 2012 ($34,892).
A midaudit briefing at $10,092 and the written report with findings and recommendations at $34,432 bring the total to $394,456, which includes travel and miscellaneous fees, according to a city presentation.
Young argued that the money would be well spent, and at about $3 per resident, “it’s a small price to pay.”
Councilman Juan Rivera was opposed to spending the money, and suggested a committee could be assembled with residents to circumvent an outside investigation.
“Four-hundred-thousand dollars is a lot,” Rivera said.
City Manager Ron Olson suggested it might be worth the investment.
Although an investigation might not yield $400,000 in findings, council members should not set their expectations there. It could provide a “true accounting” of what happened, he said.
“Are you going to find $22,000 worth of problems? I doubt it very much. … (But) the issue comes down to credibility ... the credibility of the city.”
A consensus vote is anticipated at the City Council’s next workshop meeting, March 7, to decide which items to pursue in the investigation.
A contract has not yet been signed. The tentative contract approval decision is set for March 14, and if approved, McConnell & Jones would begin the week of March 20. A midaudit briefing is May 16 — 10 days after the city’s municipal election — and work is to be completed by July 31.
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