One does not want to fly by the seat of their pants when they are responsible for $180.4 million.
But that is what the City of Manteca appeared to be doing in December when senior staff convinced the City Council to give municipal employees a gift conveniently charged to taxpayers — bonus days off with pay during Christmas week.
The rationale for the gift was two-fold. It was decided staff morale was low because of a lot of head rolling that took out City Manager Tim Ogden as well as department heads. It also was decided not much work would get done that week.
A staff report assured the council there was no fiscal impact, a claim that later had an asterisk added.
What was missing was an analysis that would have been done by the finance department. Such an exam by the city professionals hired to assure fiduciary responsibility would have looked at employment contracts regarding minimal staffing agreements in public safety as well as the need to pay other workers to cover gift days off that would need to be taken at another time for jobs tied into essential services such as operating the wastewater treatment plant.
Several employee groups, alarmed at what they thought was at least a careless plan by senior staff, generated numbers that could put the cost of the gesture at between $100,000 and $200,000. Their underlying concern was if Manteca deviated from tight-fisted money oversight the city could soon find itself in the situation Turlock was facing at year’s end with the prospect of employee layoffs and fire station closures in what was a good economy at the time because of a freewheeling spending policy.
The asterisk that was added after the possibility the holiday gesture could cost taxpayers up to $200,000 was that there were funds in the budget for overtime and at the rate of OT spending, there was adequate money set aside to cover the gift.
Four months later Manteca is now racking up overtime costs due to the pandemic.
It is clear with millions in reserves there is money to cover the cost of the Christmas gesture.
But there is a big difference having the money on hand and whether you have money budgeted to cover the cost. The possibility that the gesture might qualify as a gift of public funds is another issue entirely.
This is what can happen when you don’t have a seasoned finance department director running things.
The city since mid-September has been without a finance director when Jeri Tejeda was placed on paid administrative leave by Miranda Lutzow less than a month after the council called on Lutzow to serve as acting city manager when they placed Ogden on paid administrative leave. Tejeda was hired by another city in November.
Steve Christensen, hired as deputy finance director, was made acting finance director before his decision to take a job elsewhere on March 20 after five months on the job. Assistant City Manager Lisa Blackmon is now serving as acting finance director.
The situation was not helped at all by the council’s decision to essentially take almost seven months to hire Lutzow as Ogden’s permanent replacement. That decision has finally allowed Lutzow to start the recruiting process for a replacement as well as other department heads.
But in the meantime a mess has been created.
The audit — a critical document in assuring fiduciary compliance and to give you a clear snapshot of the city’s finances at a point in time so a realistic and balanced budget can be generated for the upcoming fiscal year — is normally completed by the end of December. It is now expected to be finished by mid-May.
It is clear due to the pandemic a lot of cities, including Manteca, will be using continuing resolutions to keep the spending framework of the current budget in place once the new fiscal year starts July 1. A budget for the new fiscal year may not be in place until months after the current fiscal year ends June 30.
To jumpstart the budget process that would normally be within weeks of being a preliminary document ready to review by the time the audit is now expected to be completed, Lutzow has retained an outside consultant to make revenue projections. Historically that has been the bailiwick of the finance director who would generate three scenarios of revenue projections for everything from sales and property taxes to hotel room taxes. They would be robust, middle-of-the-road, and conservative projections.
The pandemic — or more precisely the cure to flatten the curve of death and number of seriously ill people over a longer period of time so as not to overwhelm the healthcare system — is gutting sales and room taxes and threatens property tax as well. To project revenues into the fiscal year starting July 1 is dicey at best as the new norm to deal with the lingering COVID-19 issue will impact revenues almost as bad as completely shutting down whole segments of the economy.
There also seems to be confusion as to what work the short-handed finance department has been able to do. Leila Manor, the long-term employee who was made the city’s first budget manager just before she resigned over growing frustrations with how the city was overseeing the $180.4 in tax dollars they are entrusted with, verifies what others remaining in the department have confirmed that there is no issue with deleted data or such regarding budget preparations. It’s just that the real work hadn’t started due to the varying degrees of turmoil the department has been in since mid-September
And if there was an issue of deleted files, it would be an easy fix for the city’s information and technology staff to retrieve.
The No. 1 priority so Manteca isn’t flying blindly through a significant economic downturn is to not simply to get the finance department fully staffed but with a person in charge that is not afraid to push back when it comes to issues of fiduciary responsibility whether it is this or any other city manager or city council.
At the end of the day the city manager runs the city.
But at the same time there needs to be a strong finance director in place that will offer pushback when needed.
At the end of the day the finance director, needs to follow policies established by the City Council and implemented by the city manager. But there are also hired — or at least should be — to assure that accountability, legal requirements, and other considerations people hell-bent on spending money that is not theirs but have been entrusted to manage and spend might view as road blocks.
It is foolish to completely disregard such advice.
Lutzow clearly doesn’t want the bureaucratic process to undermine the best possible use of tax dollars and wants to get things done. However, the lack of a well-versed finance director such as the city was missing when additional paid days off were gifted to municipal employees that clearly had a cost to taxpayers can lead to unintended and expensive consequences.
An effective city manager must receive thorough counsel that they can weigh before making decisions. The level of confidence — and competence — the public can enjoy in how that relates to spending decisions is weakened the longer the city goes without a strong finance director.
It is why Lutzow needs to make getting a finance director worthy of the title in place before any other department head is replaced.