By: Cassie MacDuff | Original Article at pe.com
Beaumont’s fiscal debacle illustrates the danger of elected city councils overly trusting appointed city managers and rubber-stamping what the managers recommend.
Council members must read the fine print and ask questions. Beaumont’s former councils didn’t do that.
That is clear from the long list of shortcomings pointed out in the state controller’s recent review of Beaumont’s finances.
Basic checks and balances on the city’s accounting were missing, opening the door to fraud or embezzlement.
SPECIAL SECTION: Beaumont probe
Documents that should have showed where more than $600 million in bond proceeds were spent are also missing, so the city can’t tell if it got what it is paying for.
And the city failed to follow its own competitive bidding rules, issuing contracts on “job cards” to pre-approved companies rather than seeking the lowest price for the work.
The state Controller’s Office� also found that the city manager and public works director received fees from bond proceeds for their services through the consulting firms each headed.
There wasn’t enough documentation to know whether then-City Manager Alan Kapanicas and then-Public Works Director Deepak Moorjani were double dipping, collecting their city salaries and paying their firms for the same work.
The accounting failures left the city in debt as a $57 million judgment hangs over its head for transportation uniform mitigation funds, or TUMF, it refused to pay.
Of course, a city council wants to trust its city manager. It hired him. It has to let him do his job without micromanaging him. But that doesn’t mean it shouldn’t ask questions.
Ultimately, the council is responsible for overseeing city business. When things go wrong, the buck stops with elected officials.
State Controller Betty Yee released the report on her office’s six-month review of Beaumont’s finances last week. The findings were disturbing.
But they didn’t come as a surprise to the current council and acting city manager, who are trying to untangle the mess left by previous councils. An audit last summer highlighted many of the same problems.
Beaumont should have been on notice about sloppy accounting long ago. Every city that accepts federal funds must perform a comprehensive annual financial review, commonly called an audit.
And Beaumont’s annual audits did flag the lack of internal controls, the same deficiency highlighted in the controller’s report, said Councilman Lloyd White, who was elected last fall.
Beaumont Treasurer Nancy Carroll, also elected last fall, agreed: “There were some pretty big red flags.” But when members of the public sought a deeper look at the internal controls, Kapanicas and the then-council resisted, she said.
The city has been under scrutiny since an FBI/District Attorney’s Office raid on City Hall last spring. Kapanicas was placed on leave soon after and will permanently separate from city employment on Sunday.
The new council majority, along with Mayor Brenda Knight (elected in 2012), are moving forward with financial reforms and better oversight.
Part of that effort will be a Standing Financial Committee made up of five residents, one business owner, two council members and a member of the city’s financial staff. It will advise the council on budget, investments, financial planning and audits.
Sadly, only five people applied to be on it by the deadline Monday. The application period has been extended in hopes of attracting more candidates, acting City Manager Elizabeth Urtiaga told me Tuesday.
The citizens of Beaumont must have learned from this long, painful episode that they can’t be complacent about letting hired staff and elected officials run their city. They need to get involved. This committee is a chance to do that.
The new council includes active, engaged people who are working hard to get Beaumont stabilized. The new committee needs equally active, engaged citizens.
The more scrutiny the city’s finances receive, the better it will be for Beaumont’s future.
Contact the writer: 951-368-9470 or
cm******@PE.com