City Manager Stephanie DeWolfe on Feb. 27 announced the appointment of Karen Aceves as South Pasadena’s new finance director. Aceves, who’d been serving as one of the City’s two acting financing directors, has been with South Pasadena since January 2017. Prior to the announcement, she was poised to take a new position as South El Monte’s finance director. But she withdrew shortly after a South El Monte councilmember raised questions about her qualifications. That and her sudden promotion here raised questions about South Pasadena’s hiring practices and qualification standards.
“Karen was the perfect fit for this position thanks to her in-depth knowledge of the City and strong financial background,” said DeWolfe. “Her wealth of public-sector experience and proven ability to oversee complex projects will allow her to seamlessly transition into this new role.”
“There has been so much forward progress at the City and in the Finance Department,” Aceves said in statement to the South Pasadenan News. “I am grateful to have played a key role in shaping the City’s future as well as working alongside a supportive, talented team dedicated to public service. In the end, I realized that the best decision for me was to stay at the City where I could implement new strategies to continue the legacy of South Pasadena’s sound fiscal management.”
Aceves made her first presentation to the City Council in her new role Wednesday—a mid year budget update during which she offered detailed answers to over a dozen questions from councilmembers on PERS amortization and discount rates, tax revenue collection schedules and other technical minutia.
The City said Aceves was previously the principal management analyst and, in addition to other notable projects, oversaw three budgets, two audits and created the city’s first Capital Improvement Project Plan. Prior to joining the City, she worked three years at the Southern California Association of Governments as a budget and grant analyst and before that as a regional manager for the Census Bureau.
Aceves and Lucy Demirjian have been serving simultaneously as the city’s acting finance directors since the departure last July of Craig Koehler, who took the position 11 months earlier after the retirement of the late David Batt and Miriam Lee Ko’s subsequent four-month stint as interim finance director.
Aceves was due to leave South Pasadena February 29. Her confirmation as South El Monte finance director was on that city’s Feb. 25 agenda. South El Monte was set to sign Aceves to a 3-year, $132,300 per year employment contract under which she was to begin work March 2, 2020.
As the South El Monte Council was getting ready to vote on Aceves’ appointment, Councilmember Hector Delgado claimed his City did not follow its own protocol with respect to the educational qualifications of applicants or of providing councilmembers with background information on them. Although not referring to Aceves by name, he said the applicant “did not meet the minimum standards” and had “no background in finance whatsoever.”
“I want to make sure we do our due diligence in finding the best possible person,” he said.
During a very tense exchange with the mayor, city attorney, city manager and others, Delgado demanded the matter be removed to closed session. With the city attorney looking nervous, Mayor Gloria Olmos spoke up to say the “applicant” came highly recommended by South Pasadena Mayor Pro Tem Diana Mahmud, herself a highly respected local official.
South El Monte City Manager Rachel Barbosa spoke to Aceves’ qualifications, listing her achievements in South Pasadena and denying, as did the Mayor, that the hiring protocol was violated.
South El Monte has severe financial problems, having been subjected to a state audit, fallen out of compliance with the Government Accounting Standards Board, failing to reconcile its books since June 2018 and running a $900,000 deficit.
“We are in desperate, critical need for [a] director of finance,” Barbosa said. “This individual” does have the minimum requirements and was among the 5 of 12 applicants with a municipal finance background. “What she brings to the table is skills, experience and very special projects related to a distressed city that she came across in South Pasadena, which is very similar to the issues we are facing now.”
The city continued the meeting to a closed session and returned to open session where it took no action. Barbosa confirmed that Aceves then withdrew her application and told the South Pasadena News that her city’s loss was South Pasadena’s gain. On Feb. 27, Aceves’ appointment as South Pasadena Finance Director was announced.
At Wednesday’s South Pasadena City Council meeting, citizen Jan Marshall referred to the turbulence in the City’s Finance Department—four directors and three acting directors over the past seven years, a major scandal over business licences–to observe that “one would think that when looking for a permanent finance director, the city would want to find the most qualified person.” She then cited Delgado’s remarks referencing Aceves and asked, “is our city following its own protocols when it comes to hiring?”
Aceves is completing a master’s degree through Michigan State University. According to the city’s press release, the master’s is in “management and organizational effectiveness,” but Aceves’ social media page says she is completing the university’s master’s program in Management, Strategy and Leadership, a 24-month program that US News & World Report rates as among the top 20 online business programs. She has a 2014 BA in Spanish language and literature from Chapman University.
South Pasadena spokesperson Rachel McGuire told the South Pasadenan News March 10 that no other candidates were considered prior to Aceves’ appointment. “Appointing staff to a new role is a standard practice in the public sector, and the City’s process has been in place for numerous years,” she said in an email.
The City’s municipal code gives the City Manager authority to appoint all city officers except the city attorney, and provides specifically that the finance director “shall be appointed by, and serve at the pleasure of, the city manager” with no provision for Council confirmation. McGuire said that authority includes the ability to appoint a department head “without having to go through a recruiting process.”
McGuire said as Finance Director, Aceves’ annual salary will be $129,099, a 21.4 percent increase compared to her $106,331 salary as acting finance director.
After Batt retired in March of 2018, the city did run a recruitment. It posted a job announcement seeking a finance director with minimum requirements that included a BA in accounting, business administration or a related field, a CPA, and five years of experience including three as a supervisor.
According to a job board maintained by the California Society of Municipal Finance Officers, nine California cities have posted openings for a finance director so far this year. South Pasadena is not on the list. But three cities in the region with budgets and populations roughly comparable to South Pasadena are: San Gabriel, Seal Beach and Palos Verdes Estates. All three required candidates to have a BA in business administration, accounting, finance or a related field, with a master’s degree or CPA desired. Each also wanted about 8 years’ experience, including 3 years in a supervisory or management role, and offered an annual salary of about $144,000.
In addition, San Marino recently hired a new finance director in which it sought candidates with the same criteria as the other cities with a salary range starting at $132,192.
Over the past year, “Karen and Lucy [Demirjian] have greatly improved the efficiency and effectiveness of the City’s Finance Department, resulting in more forward momentum than was seen under the previous department leadership over the past decade,” DeWolfe said in a separate statement. Demirjian, who jointed the city in 2009 and serves also as assistant to the city manager, holds a master’s degree in public administration.
Ellen Wood, chair of South Pasadena’s Finance Commission, gave Aceves an unqualified endorsement. “She has been our go-to person. When we want to know something, she knows it, in her head, backward and forward.” Aceves always knew the answers to questions that Batt and Koehler did not, “and she doesn’t have to look it up.”
Wood was aware of the controversy but said the problem is not the extent of Aceves’ educational background, but the job description, which she said should be changed “to just say, ‘bachelors in financing, accounting or equivalent experience,’ because she’s got way more equivalent experience” than any degree could portray.
Wood also said DeWolfe had been encouraging Aceves to take the position long before she announced her decision to go to South El Monte. Nor is Wood concerned about how the decision was made. “Karen was the best choice.”