Finance Department Presented the Wrong Budget to City Council & Finance Commission | Report by Local Finance Expert

In 72 hours time between 5/26 and 5/29, the draft finance reports were altered; with at least 127 changes totaling $14.3 million in adjustments…much more significant than the $50K of “net” changes that Staff represents in the Agenda materials. Docs included below.

SouthPasadenan.com News | City Finance Commission meets, May 26, 2020. TOP ROW (L-R): Mayor Bob Joe, City Treasurer Gary Pia, Zhen Tao. BOTTOM ROW (L-R): Ed Elsner, Edwin Choi, Finance Director Karen Aceves. Not pictured: Commission Chair Ellen Wood, Vice-Chair Frederick A. Findley

By Stephen Rossi: (Credentials Click Here)

Greetings Fellow South Pasadena Residents & South Pasadena Finance Commission:

The next finance commission meeting is eminent, and their recommendations to City Council for vote are based on what has presented to be incorrect reporting from the city finance department.

Despite my best efforts to request agenda material information from City Staff with sufficient time to review the materials prior to the meeting as required under the Brown Act, Staff did not respond to my requests and only saw fit to post the relevant budget materials extremely late in the day.

As such, it was impossible to review the financial information provided and develop a coherent analysis prior to the public comment deadline.

As a result, I am reaching out to the finance commission and South Pasadena residents directly.

I believe the statements made in the Cover Letter in the Finance Commission Agenda Report dated 6/18/20 and provided by Finance Director, Karen Aceves, are materially misrepresentative of the true facts surrounding the financial information provided.
In both the 5/26 Draft Budget & the 5/29 Draft Budget presented to the City Council on 6/10 (which was neither the 5/26 nor the 5/29 drafts) and the information posted to the Agenda packet on 6/17 in advance of the 6/18 Finance Commission meeting appears to be a convoluted mix of inaccurate finance reports.
Decisions by the South Pasadena City Council, and the South Pasadena Finance Commission that have been based on the 6/10 city council meeting finance presentation are, at the very least, misinformed.

As an overarching comment, the Cover Letter serves to understate the actual volume and magnitude of the changes made between the two drafts – only 3 days apart.  In total there were at least 127 changes totaling $14.3 million in adjustments…much more significant than the $50K of “net” changes that Staff represents in the Agenda materials.

Further, without being presented with a full budget in the Agenda materials, it is impossible to tell if the numerous errors, omissions, and questionable assumptions surrounding the prior two drafts of the budget have as yet been corrected.

The only information that is known is this:

  • On 5/26, Staff presented an incomplete and error riddled budget to the Finance Commission.
  • On 5/29, Staff provided a vastly different budget in the City Council agenda packet for review, but still riddled with errors
  • On 6/10, Staff presented a third, different budget.  NOT the budget included in City Council Agenda packet, which raises additional Brown Act concerns
  • On 6/17, Staff presented the Finance Commission with a cherry-picked “subset” of changes made between the 5/26 and 5/29 drafts…but again, has not provided a complete listing of the adjustments made, choosing instead to focus on hand selected changes that serve to minimize the appearance of changes made.
  • As of 6/18 the 2018/19 audit is still not completed and is approximately six months late
  • The best explanation Staff can come up with to date is that it’s the prior “Finance Director’s fault.”  Nearly three years later and running the department as DeWolfe sees fit, with her own hires in charge of the department, and she is still blaming the prior administration for failures resulting from current day actions and decisions…hmm, seems that I’ve heard that somewhere before.

 

South Pasadena Finance Director Presentation Slide 6-10-2020 | PUBLIC WORKS DEPARTMENT SNAPSHOT | (page 17-80 of the agenda packet has wages at $3,641,382 and operations/maintenance at $5,037,196 – the numbers presented at the meeting tie exactly to the 5/26 draft, not the ones in the agenda packet) – this ties to the 5/26 budget TO THE DOLLAR
South Pasadena Finance Director Presentation Slide 6-10-2020 | POLICE DEPARTMENT BUDGET SNAPSHOT | (operations of $981K ties exactly to 5/26 budget. The agenda packet on page 17-66 has wages at $8.677 million but operations at $1.081 million)
South Pasadena Finance Director Presentation Slide 6-10-2020 | PLANNING & BUILDING DEPARTMENT SNAPSHOT | (These tie to the 5/26 draft of $1.003 million for wages and $744.9K for operations. The agenda packet on page 17-120 has $1.056 million in wages but $717.8K in operations)

The City Council has put the Finance Commission in a tough position, and I respect the decision the finance commission is faced with today.  However, the Finance Commission took on an ethical, if not fiduciary, responsibility to the City residents when accepting appointments to the Finance Commission.  That includes not serving as a “rubber-stamp” committee, and not blindly approving a budget that has been slammed together quickly, without sufficient financial acumen, clearly without quality control checks or procedures, and without the benefit of a completed financial audit that is already inexplicably delayed.

Do the right thing and kick the budget back to Staff to await the completion of the 2018/19 audit.

Click here for supporting PDF docs to my statements

Report created and submitted for publishing by Stephen Rossi, South Pasadena resident and finance expert.

 

 

 

 

 

 


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5 COMMENTS

  1. Thank you Stephen Rossi for your thorough deep dive into the discrepancies between the budgets. After almost three years at the helm, our City Manager has opted to blame past city managers for irregularities. I’m not a financial expert, but I do know that 2+2 does not equal 5. I believe that the Finance Department believes the public and even the City Council is not paying attention, so that’s why we have this mess. Time to clean house!

  2. I stand arm-in-arm with Stephanie DeWolfe and the South Pasadena City Council on these questions. As city staff has pointed out, the current leaders of our city simply inherited a financial disaster from the people who ran the city in 2018, and city staff is now just cleaning up those old problems. What we need to do now is figure out the identity of the incompetent fools who ran the city government in 2018, and make sure those people never hold positions of responsibility in our community again. I hope the city will provide a complete list of the names of the idiots who served as city manager and city councilmembers back in 2018, when everything was a mess, so they can be held accountable.

  3. Okay, so let’s assume that if Aceves’ expert assessment of the recent budget switcharoo, can all be explained away by former bad policies and outdated software, what is Gary Pia’s excuse for being completely in the dark about all of these systemic flaws for the 10 years that he has been Treasurer?

    One would think that he would have noticed, I don’t know, six years ago, last year or even on May 26 that there were red flags?

    What is happening?