The Buck Stops Nowhere!

As I was surfing through the channels on my trusty Comcast cable last night I suddenly came upon the session of the Richmond City Council. Since there were commercials on the other channels any way, I decided to watch for a while. When it became too unbearable to watch, I shut off the television. That was about seven or eight minutes later.

The council was discussing a paper (councilese for a bill) that would authorize a study of whether the auditing functions of the city and Richmond Public Schools should be combined. I have lived in Richmond long enough to know that when the members of the council want to duck an issue they usually authorize a study. That way they can put off taking any action for a while or, if they are lucky, the issue might just go away.

Well, it soon became apparent to me that I had missed the highlight of the evening. It seems that some citizen had had the temerity during public comments to blame the council for the fiscal mismanagement in the city. As I joined the show, Council President Pantele was expressing his outrage at the offending taxpayer. Mr. Pantele made it clear that he thought the citizen had abused the public comment period by heaping scorn on the council. Mr. Pantele, who apparently does not agree with Harry Truman’s “If you can’t stand the heat, get out of the kitchen,” stated that he was offended that any citizen could even think that the City Council was accountable for anything that goes on in the city.

Mr. Pantele was followed by Council Vice President McQuinn who joined the “no mea culpa” theme. Ms. McQuinn stated quite clearly that she would accept no responsibility for any fiscal mismanagement in the city. Since she had never written a check on behalf of the city or instructed any city employee to take any action, she clearly felt no need to acknowledge that all this maladministration had happened on her watch. Ms. McQuinn’s “see no evil, hear no evil” posture fits in quite nicely in River City.

Then Northside District councilperson Hilbert started talking. He spoke of some meaningful things, like the City Council’s oversight responsibility for all the operations of city government. He also expressed his opinion that the Wilder Administration had violated the terms of the council’s budget ordinances and that the council had a responsibility to expose the administration’s misdeeds.

It was at this time that Central District councilperson Jewell shouted out “Point of order, Mr. President.” Mr. Jewell, a staunch supporter of the mayor, felt that Mr. Hilbert’s discussion of oversight and accountability was not germane to the paper being considered by the council. President Pantele agreed and ruled Mr. Hilbert out of order. The only “relevant” part of the discussion was over. I pushed the OFF button on my remote in disgust.

So, citizens of Richmond, we have a mayor who goes around with a “What, Me Worry?” attitude. He can’t be blamed for any wrong that happens in the city because he denies any knowledge. We have a City Council whose members think they are not accountable or responsible for anything that goes on in the city. And we taxpayers just keep on paying the bills.

Dear reader, the next time you have nothing to do on a Monday night watch the Richmond City Council in action. It is obviously the best reality show in town.

Hey! That’s Our Money!

For a good part of my career as an attorney for the Federal Government I taught a course called “Principals of Appropriations Law.” I taught the course to other lawyers, to budget officers, to procurement officers, to contracting officers and to myriad other government personnel. In that course I taught the laws and rules governing the proper use of public money. Of all the things I tried to impress upon my students, the most important was that the funds they were administering did not belong to them. Rather, these funds belonged to the taxpayers. It was crucial, therefore, that they only use these funds for authorized purposes and in authorized ways.

Well, after reading the Executive Summary and skimming carefully through the rest of the City Auditor’s latest report on the purchasing and accounts payable functions of Richmond Public Schools, it is apparent to me that there a whole bunch of people working for RPS who need to take the course. The report found many weaknesses in the RPS procurement and bill paying mechanisms. It made 102 recommendations on how RPS could improve these functions and eliminate wasteful spending. (If you want to look at the report, you can download it from the Richmond Times-Dispatch. However, unless you’re a real lover of audit reports or a masochist, I would recommend that you only read the Executive Summary).

On the evening news last night I watched Superintendent of Schools Dr. Deborah Jewell-Sherman discussing the audit report. As quoted in the TD this morning, Dr. Jewell-Sherman likened the audit report to a returned graduate school paper. “In graduate school, if you are going to get less than a B on a paper, your professor hands it back and says: redo. This is a redo.” Schools audit sparks calls for change I understand the superintendent’s desire to put the proper spin on the auditor’s findings. I also understand that the purpose of an audit is to help an organization recognize and fix its shortcomings. It is not intended to be an indictment. However, there is a certain lack of accountability in the superintendent’s statement that bothers me. I would have much preferred “We blew it. I am responsible. We will do better in the future.” Calling the audit report a “redo” shows a lack of appreciation for the fact that a lot of taxpayer money was wasted by the weaknesses in RPS’s operations.

Dr. Jewell-Sherman’s statement also fails to recognize the devastating effect this audit report has on the already weak public support for Richmond Public Schools. The superintendent needs to look at the public comments last night on the TD’s first story on the audit report. Auditor blasts Richmond school system There are five pages of comments and most of them are quite negative.

In a recent post (You Got Trouble Folks! Right Here In River City) I reiterated my five principals for repairing Richmond Public Schools: 1-Treating all students as if they were our own; 2- demanding excellence from all our students; 3- Holding our teachers accountable for their students’ learning; 4- responsible budgeting; and 5- accountability. In talking about accountability I indicated that the voters of Richmond should hold both the City Council and the School Board accountable for the operation of our public schools. I said that the School Board must hold the superintendent accountable for the day to day operation of the schools. I concluded with “Every person who has authority to spend school funds must be held strictly accountable for the money they spend.” I see now that that last sentence didn’t go far enough.

In a subsequent post (A Watchdog with Teeth) I quoted from the Government Auditing Standards in setting forth the accountability of public officials or employees in dealing with public funds. In short, those entrusted with handling public resources are:
1- responsible for applying those resources “efficiently, economically, and effectively” for the purposes for which the resources were provided;
2- responsible for complying with applicable laws and regulations;
3- responsible for establishing and maintaining effective controls to ensure that the funds are properly and efficiently used; and
4- accountable to the public for the resources provided to carry out government programs and services.

The School Board and the Superintendent of Schools need to regain public confidence in Richmond Public Schools. They must establish an atmosphere of accountability throughout the school system. They must teach every employee that s/he is personally responsible to the taxpayers for the way s/he uses public resources. They must establish a system of internal controls in RPS that greatly reduces the possibility of misuse of funds. They cannot allow mismanagement in operations to cloud what is the real mission of Richmond Public Schools—to provide a world-class education to every child in the city.

A Watchdog with Teeth

Monday, in a press release, mayoral candidate Paul Goldman urged moving the City Auditor’s functions to the office of City Treasurer where it would be immune from political pressures. In Mr. Goldman’s words,

[W]e need a truly independent auditor, someone who never has to worry about whether he or she might lose their job due to pressure from the politicians on City Council or in City Hall on account of any audit project.
Therefore, I propose that the City Treasurer be given the city auditor function, thus transferring that legal responsibility to an independently elected official accountable to the people.

Although I agree with Mr. Goldman that the auditing function should not be subject to political pressure, I do not think that the City Treasurer, whose primary job is to assure the collection of state taxes and their transfer to the Commonwealth, is the right official to oversee the auditing function.

But wait, Maven, why do we need an auditor at all. Isn’t it all just bean-counting?

Dear reader, I and thousands of other residents of River City pay beaucoup bucks in taxes to support our government. We have a right to expect that our elected and appointed officials will use that money lawfully and efficiently. As explained in the Government Auditing Standards, issued by the Comptroller General of the United States:

· Public officials and others entrusted with handling public resources … are responsible for applying those resources efficiently, economically, and effectively to achieve the purposes for which the resources were furnished. This responsibility applies to all resources, whether entrusted to public officials or others by their own constituencies or by other levels of government.
· Public officials and others entrusted with public resources are responsible for complying with applicable laws and regulations. That responsibility encompasses identifying the requirements with which the entity and the official must comply and implementing systems designed to achieve that compliance.
· Public officials and others entrusted with public resources are responsible for establishing and maintaining effective controls to ensure that appropriate goals and objectives are met; resources are safeguarded; laws and regulations are followed; and reliable data are obtained, maintained, and fairly disclosed.
· Public officials and others entrusted with public resources are accountable both to the public and to other levels and branches of government for the resources provided to carry out government programs and services.

Auditing is the public function that assures that all these responsibilities are being fulfilled. By reviewing and reporting on government operations, the public auditor enables taxpayers to feel confident that their tax money is being properly spent.

Richmond’s City Auditor is appointed by the City Council under section 4.18 of the City Charter and may be removed by the council under section 4.14 of the charter “for any lawful reason or no reason.” Mayor Wilder has repeatedly used this fact to charge that the auditing function is politically motivated. The mayor has objected to the City Auditor, Umesh V. Dalal, auditing the executive offices of Richmond government rather than Richmond Public Schools, where Mr. Wilder “knows” that all the fraud, waste and corruption are hiding. In a blistering letter last summer, Mayor Doug attacked Mr. Dalal for his “effrontery” in demanding access to the records of Deputy Chief Administrator Harry Black. Mr. Dalal defended his independence by saying, "Neither the mayor nor the council tells me what to do. [The mayor] is the one insisting that I be independent of the council. That means I have to be independent, period."

The City Council changed things a bit this week by assigning inspector general functions to the City Auditor. Ordinance 2007-285-2008-67. The inspector general functions are defined in the ordinance as:

1- To audit, inspect, evaluate and investigate the activities, records and individuals affiliated with contracts and procurements undertaken by the City and any other official act or function of the City.
2- To conduct criminal, civil and administrative investigations relating to the municipal affairs of the City.
3- To engage in preventive activities, including, but not limited to, (i) the review of legislation, (ii) the review of rules, regulations, policies, procedures and transactions, and (iii) training and education.
4- To refer matters for further civil, criminal and administrative action to appropriate administrative and prosecutorial agencies.
5- To conduct joint investigations and projects with other oversight or law enforcement agencies.
6. To issue public reports.

The ordinance also creates the Inspector General Oversight Board for the purpose of monitoring and overseeing the inspector general functions of the City Auditor. In addition to reporting on the activities of the City Auditor, the board will have a role in the possible removal of the auditor from office. The ordinance provides:

(2) Prior to any removal of the City Auditor, the Council shall forward a copy of the resolution introduced to effectuate the removal of the City Auditor along with a written statement of the reasons for the removal to the Board for review and recommendation.
(3)The Board shall review the resolution and the reasons given for the removal and shall hold a public hearing on the matter before voting on a recommendation to remove or not remove the City Auditor.

This purpose of this procedure is described as establishing and maintaining the independence of the inspector general function. However, the ordinance does not change the fact that under section 4.14 of the City Charter the council may still remove the auditor from office with or without cause.

I really won’t comment on the wisdom of expanding the auditor’s functions to include criminal investigation. I think it arises from a misconception by the council that criminal activity is the main cause of misspent government funds. In fact, most misspending of government money is caused by poor management, not crime. Further, having worked for an audit agency that added a criminal investigation unit I can testify that most of the time it was more trouble than it was worth.

I’m also not sure that the Inspector General Oversight Board provides sufficient independence for the City Auditor. So long as the auditor is hired and fired by the City Council s/he is subject to political pressures. However, I don’t think that Mr. Goldman’s idea that the auditor be elected by the people is the answer.

I propose the following as the best way to protect the independence of the City Auditor:

1- The term of the City Auditor should be set at a definite term, say seven years;
2- When there is a vacancy, the City Council would prepare a list of three candidates for the position;
3- The city’s Chief Administrative Officer would then appoint one of the people from the City Council’s list as the City Auditor;
4- The City Auditor could only be removed from office by the City Council and then only for cause.

Loyal reader, I’m not sure that guarantying the independence of the City Auditor is enough. Nor do I think that adding the inspector general functions to the auditor’s plate will make much of a difference. The problem is that no matter how big a watchdog we buy, it will not be able to protect the public fisc unless it has real teeth. Regardless of the powers that it assigns to the City Auditor, unless it also provides adequate funding for the office, the City Council will have accomplished nothing.

If you remember, two weeks ago Mayor Wilder’s budget proposed significantly reducing funding for the city auditor. Of course, the mayor’s proposal is absurd. However, merely funding the auditor’s office at this year’s level is clearly not enough.

In the article “Auditor's work, staff don't add up” last December, Times-Dispatch reporter Michael Martz indicated that the auditor’s office was operating with only half of its ten budgeted professional staff. The City Auditor was unable to hire additional staff because of inadequate salaries, competition from other jurisdictions and concern over turmoil at City Hall. David Ress’ TD article this Tuesday indicates that the auditor’s office is still operating with only five professional staff.

By adding the inspector general functions to the City Auditor’s office the City Council has assured that Mr. Dalal can not do his job adequately even if he is able to fill all the vacancies on his staff. I can’t see the auditor’s office doing all the auditing and investigative work that the council has assigned to it without a professional staff of at least twenty people. If the City Council is serious about protecting the taxpayer’s money it must appropriate sufficient funds to the City Auditor’s office to provide our watchdog with strong and sharp teeth.

Money is Tight?

I sit with two Times-Dispatch articles in front of me and I am a bit perplexed. Dear reader, this is not a case of my aged brain failing me. Rather, it is words and actions by the leaders of our beloved city that simply make no sense. I look at the TD front page headline of March 2, 2008, and read “Top Wilder aides’ pay up 13-20%.” (http://www.inrich.com/cva/ric/news/sunday.apx.-content-articles-RTD-2008-03-02-0173.html) Then I look at the headline in today’s Metro section and read “Wilder’s Budget: ‘Money is tight’.” (http://www.inrich.com/content/cva/ric/news.apx.-content-articles-RTD-2008-03-07-0135.html.) Now, friend, even without reading these articles, you’ve got to admit that there is a breach in logic in these two stories. How can our CEO (Doug Wilder) claim that money is tight when his CAO (Sheila Hill-Christian) approves pay increases of 19 percent for Richmond CFO Harry Black, 18 percent for deputy CAO Saphira Baker, 17 percent for chief of staff Sandra Robinson, 16 percent for director of community development Rachel Flynn and 13 percent for Budget Director Raylord Harris? It seems to me this is a clear case of talking the talk but not walking the walk by the Wilder Administration. If money is so tight, why is it that the top executives of Richmond continue to prosper?

Today’s TD article quotes Mayor Doug as saying,

"Money is tight. Those who want to act as if the city coffers are full and growth is robust or will rebound quickly are deluding both themselves and the residents of Richmond."

Mr. Wilder has responded to the money crisis by limiting the increase in city spending to three percent. He also opposed cutting the real estate tax rate, calling any City Council attempt to cut that rate “a disingenuous election-year shell game.”

To prove that he is serious about keeping city spending under control, Doug proposed increases of 30% for his press secretary’s office, 17 percent for the CAO’s office, 15 percent for city procurement, 13 percent for the budget office, 10 percent for the finance office and 9 percent for his own office. To be fair, I must point out that he also proposed a 12 percent increase for the City Council chief of staff’s office (“throw the dog a bone”). To demonstrate that everybody in his administration must bear the suffering, Doug’s budget restricts pay increases for the city’s grunts to three percent.

Citizens of Richmond, something foul is going on here. It’s not just that Mr. Wilder’s budget does not match his rhetoric. What’s foul is that more than three years after we voted overwhelmingly for cleaning up the mess at City Hall we still have city leaders who have no concept of accountability for public money. The mayor, through his agent Ms. Hill-Christian, sees nothing wrong with awarding huge pay increases to top administrators while the average city worker is held to an increase of only three percent. What is worse is that the City Council has allowed the perpetuation of a system in which the mayor has the authority to make such arbitrary salary decisions.

The most shocking of Doug’s budgetary proposals is a 24% cut in funding for the city auditor. For our mayor to advocate such a cut is akin to the fox advocating extracting the teeth of the henhouse watchdog. (Put your gun away, Your Excellency, I am not accusing you of being a criminal). Auditing the operations of government is one of the guarantees we citizens have that our tax dollars are being properly spent. The keys to assuring accountability in our public servants are to remove temptation by strictly controlling how money is spent and for everybody to know that they are being watched. Recent reports by the city auditor indicate that there are inadequate controls in many of the city’s operations. Mayor Doug’s proposal to cut funding for the auditor’s office would, if accepted by City Council, convey to city employees the belief that nobody is reviewing their actions. I am not suggesting that public employees are a dishonest bunch. However, even though I trust my neighbors, I’m still gonna lock my front door at night.

Don’t think that I am limiting my criticisms to the Wilder Administration. There is plenty of blame to be borne by our valiant knights on the City Council. I have to agree with the mayor that all this talk of a cut in the tax rate is related to the upcoming election. Many of our council people have accomplished little during their terms and want to at least be able to claim that they have cut the tax rate. When I receive a report from my council representative (paid for I assume by my tax dollars) bragging about cutting the tax rate I have to wonder. Do these nine people really think we don’t know that we pay far more in real estate taxes than do any of our suburban neighbors? Last year I asked why we in Richmond pay so much more for government than do the people on the other side of the city’s meandering borders. (http://jamesrivermaven.blogspot.com/2007/07/why-do-we-pay-more-in-richmond.html) I have never received an answer.

Another failing of the City Council is that it has not legislated systemic changes in city operations that would provide more controls on wasteful spending. Being our legislature, the council is not only responsible for passing ordinances. It is also responsible for oversight of city operations. If the City Council is serious about controlling wasteful spending it needs to sift through every page of the mayor’s budget and demand justification for every penny Doug intends to spend.

I have saved for last my views on the part of the budget dealing with Richmond Public Schools. The TD article this morning indicated that the mayor proposed to increase funding for the schools, “the biggest portion of the budget,” by 0.6% to a total of $161 million. First we need to look at the figures. The $161 million mentioned includes about $28.5 million in state sales tax money that the city receives for the schools. For reasons not clear to me, the city counts the money it receives from the state as revenue when it arrives and as expenditure when it is transferred to RPS. Since these funds are merely a pass-through, it makes no sense to me to consider them as a payment from the city. In fact, the city’s payment for public schools is only $132.5 million. This means that funding for schools is not “the biggest portion of the budget.” That honor goes to “Safety and Judiciary.” It also means that city spending for schools is not increasing by 0.6% but by only 0.4%. The fact is that city spending for schools will have increased by only about $500,000 over the three fiscal years 2007, 2008 and 2009, if the mayor’s budget proposal is improved. That $500,000 increase is about the same as the total salary increases received by our top city officials. In a city in which the perceived quality of public education, and the resulting exodus of our middle class, is an issue of critical importance, the mayor continues to show that he is out of touch with our real needs. If the City Council goes along with this miniscule increase in school funding, it will demonstrate that its members too don’t represent the true interests of Richmond’s residents.