Friday, January 22, 2010

January 22, 2010 How Morristown Can Start To Get Its Financial Affairs in Order

A prior noe4accountability post notes Morristown Mayor Sami Barile's admission on Tuesday, January 19, that the City had no reserves and nothing in its rainy day fund as of 6/30/07 and that the City has just recently discovered this fact. There are many other financial facts that the Mayor and Council do not know about --in 2007, 2008, and 2009.

The major reason for this financial debacle was and is a total lack of checks and balances and a lack of accountability on the part of the Mayor and City Council. The Mayor once stated that the Mayor and Council shouldn't micromanage the affairs of the City. Well, how about just some kind of management?  How about paying attention?  How can you be accountable if you don't even know what's going on and don't try to find out?

After the Mayor's January 19th statement, I presented some commonsense suggestions to the City about how it might begin the process of gaining budgetary control and establishing some accountability for taxpayer funds.

1) Establish separate bank accounts for the city's main funds (general fund and sewer fund) as well as for minor funds (especially grant funds).  Presently, the city has one big bank account and all checks are written off that account.  The City should abolish the one big bank account system that has contributed to the current situation with repeated violations of state law as the City simply keeps writing checks and dipping into or borrowing sewer funds without local and state authorization when the general fund runs out of money or needs to be shored up.  Here is another suggestion that I did not mention in my comments to council: the City also needs to review its Charter and determine if the commingling of sewer monies and general fund monies in one big bank account is prohibited by the Charter. The Charter is on the city website, but one never knows if the online form is an updated and accurate version.

2)  Have timely presentation of budget amendments by the Budget and Finance Directors and department heads. You shouldn't be making one big budget amendment in late 2009 or early 2010 to figure out what happened on 6/30/09 which is the end of FY 2009.

3) Enact an ordinance that provides clear whistleblower protection to those employees or others who are willing to come forward with information about fraud, waste, abuse, suspected illegal money transfers, misuse of grant funds, etc.

4) Do a complete and detailed audit for 2009.  The current audit is a typical governmental audit that is just a cursory sampling of a small number of revenue and expenditure items that are provided to the auditor. If the small number of samples looks OK, the auditors give an opinion that the financial statements fairly represent the financial situation of the city.  While a cursory sampling is all that is required by the state for a regular  annual audit, at this time Morristown desperately needs a full and detailed outside audit of virtually all transactions and financial procedures and internal controls. A new administrator, Anthony Cox, has arrived just in time to hear the revelations of past (2007 and 2008) and current (2009) financial switcheroos and violations of state law. The Mayor, councilmembers, and Mr. Cox should insist on a full and detailed audit and get this financial ship righted and then keep it right!

The City's situation reminds me of the county's situation right before I was elected to county commission in 2002. As a citizen I had been watching and gathering information as my concerns about rising taxes and new taxes (remember the "temporary" wheel tax) and school board construction program bid-rigging (multi-millions of dollar in one-bid contracts) grew. I knew there were violations of state law and financial shenanigans. I went to the Comptroller's Office in August 2001 and in mid-2002 state law was changed to stop the school board's version of construction management with its one-bid contracts.

Then I ran for county commission on a platform of open government, change, and accountability. Once elected, I made the motion to have auditors from the State Comptroller's Office perform the county's audit. The first audit by the Comptroller's personnel saved the county $18,000 AND resulted in a huge number of findings of violations of state law and financial irrregularities. In fact, Hamblen County had more findings that any other county in the state. While the initial audit by the state auditors reflected badly on Hamblen County financial operations, the end result was better controls and fewer violations in future years. Click here for a short post on the first audit by the State Comptroller's auditors.

Morristown needs to take its medicine and get a new set of auditing eyes NOW and for the future. Getting a new set of auditing eyes is not a direct reflection on the current city auditors [who, incidentally, were the county's auditors in 2002 before the Comptroller's personnel came in].  Auditors need to be changed routinely every 3-5 years.  It is hard for a local auditor to be truly independent when he or she lives in the same community and goes to church with and belongs to the same clubs as the elected officials and governmental employees being audited.  That's human nature, but it can be eliminated by getting outside auditors and rotating auditors periodically.

What I did from 2000-2002 in prompting a change in state law to address the local school board's bid-rigging scheme and its construction management system of paying people to manage themselves made me no friends on the school board.

What I did in county government from 2002-2006 in exposing waste and abuse and demanding accountability for county taxpayer dollars made me no friends in high places.

And those enemies among the politically, socially, and financially high and mighty continue to attack and attack.

Well, so be it. I'm not going away. There are large numbers of Americans across this beautiful country who are just now waking up to the waste, corruption, lies, and conflicts of interest in government at every level. I had my awakening years ago.

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