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Straining fingers with rapid response pointing ignores City of Manteca’s $67 million question
PERSPECTIVE
pinkerton
The last time the City of Manteca opened the inner workings of the finance department to intense public scrutiny was when Steve Pinkerton was city manager and he wanted everyone from citizens to employees to have complete access to financials, options, and trend models to deal with issues to advise the council on how best to deal with the loss of income during the Great Recession. Pinkerton is shown in early 2009 talking to a city resident at a public gathering.

 

The City of Manteca was facing the prospect of multiple year deficits pushing $18 million.

Steve Pinkerton, recently minted as the new city manager, vowed to keep Manteca afloat. To do so he relied on two things: Complete transparency with the municipal workforce and public as well as instructing staff to leave no stone unturned to make sure the city could survive the Great Recession triggered by the housing crisis with minimal impact to municipal services.

Why something that happened 11 years ago is relevant today has everything to do with how the City of Manteca keeps tabs on money and secures public trust.

Tonight the Manteca City Council will receive a status report regarding the disarray that is the Manteca finance department from Stephanie Beauchaine.

She’s known as the city’s interim finance director. That title, however, does not do justice to her skill set. Beachaine is more like a “cleaner”. For more than a decade she’s been tapped by cities that find themselves in financial messes. Beauchaine comes to town, consults with other experts in the field whenever she finds a twisty curve on a dead-end in her pursuit of financial clarity for a city. Her job then is to find out what is wrong, how it happened, give an accurate assessment of what is for going on, devise a system and implement, and leave behind a plan to move a city forward before going onto her next challenge.

So what does Pinkerton’s effort to fortify Manteca against the ravages of the recession have to do with the discovery in the past six weeks that Manteca has $67 million in cash deficits, that departments are keeping off-book spreadsheets instead of the general ledger being reconciled, and the fact revenue assumptions may be overconfident among other things?

For starters, it is the first time in 11 years that how Manteca counts the proverbial beans and keeps track of them has come under intense scrutiny.

The year 2009 was also when Manteca “discovered” it had more than $1.2 million sitting in an account that they had no idea what it was for or why it was collected.

The $1.2 million was a tax a previous City Council had imposed on building permits in the 1980s and early 1990s before dropping it.

No one in 2009 knew what the money was for although the money was duly logged in the bowels of annual finance reports. It turns out it was supposed to address growth-related costs for the city but it wasn’t restricted as such. In the end it was consumed in a bid to bridge massive budget gaps to keep service cuts to a minimum.

This is important because the initial reaction to stories regarding Beauchaine’s assessment of what ails the finance department has sprained countless fingers trying to point to people to assess blamed as well as having some chirp the predictable modern-day Greek chorus signature phase of “fake news’ when they seek to dismiss something they do not want to hear.

The problem with finger pointing is two-fold. It makes no sense at this point given things are still being sorted out. Based on what has been laid out in broad terms of what has been found is that specific accounting procedures and such that come with how restricted money has been handled have not always been followed.

Much of it is likely to be miscues or failure to follow through. That said thanks to the general ledger not having a hard closure back to 2005 means the odds are great that numbers that have been tracked to build budgets aren’t correct.

Beauchaine believes there will be actual instances of cash not being where it is supposed to be thanks to things such as inter-fund borrowing, development agreements including the one for Great Wolf not being implemented properly, and grant requirements not being met.

One possible scenario is enterprise funds have been shorted. That could mean the general fund would take a hit to true up the enterprise funds as required by law which could lead to a reduction in money to underwrite general services of which police and fire account for 62 percent of all expenditure.

The flip is also possible. Enterprise funds — water, solid waste, wastewater and the golf course — may have gotten money credited to them they weren’t due which could lead to rate increases.

It could be a combination of both and/or a question of rules not being follows for state and federal grants that could force the money to be returned and what expenses to city incurred to date being shifted to local taxpayers.

What exactly it is will not be known until further drilling is done. The city is unlikely to be sent into the fiscal abyss. At the same time the odds are strong revenue projections have been incorrect and due to the ripe environment for errors and omissions by having as many as 17 separate off book spreadsheets being used to generate budget status reports and form budgets will mean the city has less money than they thought they did.

Bringing such information forth now could imperil the incumbents on the election that is 14 days away. It is likely to have an adverse impact on the Measure Z one cent sales tax measure.

So why didn’t City Manager Miranda Lutzow wait until after the election to drop the bombshell? After all, conventional wisdom would say that is not doing incumbents Gary Singh and Debby Moorhead any favors.

Lutzow insists it is out of transparency. Even though exact numbers with individual funds won’t be sorted out until everything is backtracked,and correctly posted will not be known probably for months, the general problems have been identified. Luztow believes the public needs to know what is going on at city hall when it is verified and reportable.

From a practical standpoint had Lutzow waited her ability to right the ship — so to speak — would have been jeopardized by those who could contend she did so to protect two incumbents that helped put her in the city manager’s office.

By avoiding playing politics — or looking like she did — it makes it more plausible that the public’s best interests are served which is assuring the integrity of the accounting of tax dollars and fees the city is entrusted to handle.

That needs to be the main focus.

The rush to finger point at the current council, the last council, Mayor Ben Cantu or whoever someone’s favorite bogeyman is for Manteca’s ills creates a lot of noise that obscures what really matters — making sure municipal funds are properly accounted for and spent as required.

 

Steve Pinkerton, recently minted as the new city manager, vowed to keep Manteca afloat. To do so he relied on two things: Complete transparency with the municipal workforce and public as well as instructing staff to leave no stone unturned to make sure the city could survive the Great Recession triggered by the housing crisis with minimal impact to municipal services.

Why something that happened 11 years ago is relevant today has everything to do with how the City of Manteca keeps tabs on money and secures public trust.

Tonight the Manteca City Council will receive a status report regarding the disarray that is the Manteca finance department from Stephanie Beauchaine.

She’s known as the city’s interim finance director. That title, however, does not do justice to her skill set. Beachaine is more like a “cleaner”. For more than a decade she’s been tapped by cities that find themselves in financial messes. Beauchaine comes to town, consults with other experts in the field whenever she finds a twisty curve on a dead-end in her pursuit of financial clarity for a city. Her job then is to find out what is wrong, how it happened, give an accurate assessment of what is for going on, devise a system and implement, and leave behind a plan to move a city forward before going onto her next challenge.

So what does Pinkerton’s effort to fortify Manteca against the ravages of the recession have to do with the discovery in the past six weeks that Manteca has $67 million in cash deficits, that departments are keeping off-book spreadsheets instead of the general ledger being reconciled, and the fact revenue assumptions may be overconfident among other things?

For starters, it is the first time in 11 years that how Manteca counts the proverbial beans and keeps track of them has come under intense scrutiny.

The year 2009 was also when Manteca “discovered” it had more than $1.2 million sitting in an account that they had no idea what it was for or why it was collected.

The $1.2 million was a tax a previous City Council had imposed on building permits in the 1980s and early 1990s before dropping it.

No one in 2009 knew what the money was for although the money was duly logged in the bowels of annual finance reports. It turns out it was supposed to address growth-related costs for the city but it wasn’t restricted as such. In the end it was consumed in a bid to bridge massive budget gaps to keep service cuts to a minimum.

This is important because the initial reaction to stories regarding Beauchaine’s assessment of what ails the finance department has sprained countless fingers trying to point to people to assess blamed as well as having some chirp the predictable modern-day Greek chorus signature phase of “fake news’ when they seek to dismiss something they do not want to hear.

The problem with finger pointing is two-fold. It makes no sense at this point given things are still being sorted out. Based on what has been laid out in broad terms of what has been found is that specific accounting procedures and such that come with how restricted money has been handled have not always been followed.

Much of it is likely to be miscues or failure to follow through. That said thanks to the general ledger not having a hard closure back to 2005 means the odds are great that numbers that have been tracked to build budgets aren’t correct.

Beauchaine believes there will be actual instances of cash not being where it is supposed to be thanks to things such as inter-fund borrowing, development agreements including the one for Great Wolf not being implemented properly, and grant requirements not being met.

One possible scenario is enterprise funds have been shorted. That could mean the general fund would take a hit to true up the enterprise funds as required by law which could lead to a reduction in money to underwrite general services of which police and fire account for 62 percent of all expenditure.

The flip is also possible. Enterprise funds — water, solid waste, wastewater and the golf course — may have gotten money credited to them they weren’t due which could lead to rate increases.

It could be a combination of both and/or a question of rules not being follows for state and federal grants that could force the money to be returned and what expenses to city incurred to date being shifted to local taxpayers.

What exactly it is will not be known until further drilling is done. The city is unlikely to be sent into the fiscal abyss. At the same time the odds are strong revenue projections have been incorrect and due to the ripe environment for errors and omissions by having as many as 17 separate off book spreadsheets being used to generate budget status reports and form budgets will mean the city has less money than they thought they did.

Bringing such information forth now could imperil the incumbents on the election that is 14 days away. It is likely to have an adverse impact on the Measure Z one cent sales tax measure.

So why didn’t City Manager Miranda Lutzow wait until after the election to drop the bombshell? After all, conventional wisdom would say that is not doing incumbents Gary Singh and Debby Moorhead any favors.

Lutzow insists it is out of transparency. Even though exact numbers with individual funds won’t be sorted out until everything is backtracked,and correctly posted will not be known probably for months, the general problems have been identified. Luztow believes the public needs to know what is going on at city hall when it is verified and reportable.

From a practical standpoint had Lutzow waited her ability to right the ship — so to speak — would have been jeopardized by those who could contend she did so to protect two incumbents that helped put her in the city manager’s office.

By avoiding playing politics — or looking like she did — it makes it more plausible that the public’s best interests are served which is assuring the integrity of the accounting of tax dollars and fees the city is entrusted to handle.

That needs to be the main focus.

The rush to finger point at the current council, the last council, Mayor Ben Cantu or whoever someone’s favorite bogeyman is for Manteca’s ills creates a lot of noise that obscures what really matters — making sure municipal funds are properly accounted for and spent as required.