RESULTS

My previous blogs reviewed the cast of characters, the items under investigation, the city hall atmosphere, and the how, why and what was done. Now its time to look at the results that the external audit produced. The following recommendations are relatively easy to implement and some have already occurred. Frankly, that’s the easy part. These recommendations will enforce and safeguard sound, fiscal policy positions for the city.

  • The City of Glendale should implement an anti-fraud program that would include the following:
  • Conduct a fraud risk assessment to identify areas that are vulnerable to fraud, waste and abuse and/or employee misconduct;
  • The City should implement a code of conduct and provide training for that code;
  • Create an ethics hotline where callers could be allowed to provide information anonymously. The calls should be investigated (by whom? At the very least, a third party, neutral, should be used. Perhaps it’s time to create an Employee Ombudsman) thoroughly and immediately with reports provided at least quarterly to the City;
  • Implementation of the ethics/antifraud program should be communicated to all levels of employees.
  • Retention policy for emails/server information should be reconsidered. Sixty days for email backup is not adequate for litigation and investigative purposes. The minimum should be one year.
  • Decisions on significant programs, such as the ERP, should be supported by sound financial analysis and supporting documentation discussing both the short-term impact, and potential long-term impact of the program. It should also document City Management’s consideration and reasoning for recommending or implementing such a program.
  • Have Risk Management and Workers’ Compensation trust fund boards meet more frequently than once a year. (Already implemented before I left as Chairperson)
  • City should evaluate its current policies and guidance as to required authorization for transfers and revise if necessary. These policies should be assessed by City attorneys for consistence with applicable statutes, regulations and ordinances. (The City Attorney Office’s oversight has been nothing short of abysmal)
  • Revise charter/ordinances to require the notification and/or involvement of the City Attorney over all significant transactions.
  • To the extent that budget appropriations transfers are a practical necessity during the year, update or revise the policies to clearly set out what is and is not permitted, as well as what transfers and when those transfers must go for City Council approval.
  • To the extent that the City desires to pay certain administrative costs and salaries related to the appropriate trust fund purposes [as with other cities] -ordinance or amendment to governing documents should be considered and approved by City Council to authorize these expenditures. (Had been proposed to Council but not yet implemented)
  • Premium levels charged to City departments are subject to the recommendations and the discretion of the City Management. Premiums should be based on sound long-term evaluations rather than by short-term cash needs.
  • Significant changes in trust fund premiums (e.g. >20%) paid by City departments should be authorized to the City Council in advance.
  • City Auditor should report directly to the City Council rather than the City Manager. This recommendation has already been made implemented.
  • The City’s external auditor should be engaged to perform at least an annual audit of internal controls.

REPERCUSSIONS

This is not an easy topic nor are there any easy fixes. Today’s City Hall environment is positively toxic. Hopefully the new City Manager will make it her priority to reverse this situation. Obviously politics is not confined to politicians. It’s pervasive throughout this city organization and can be found in every other city. It’s not an aberration confined only to Glendale. When Beasley came on board as City Manager, if nothing else, his control of the organization was absolute and during his tenure political intrigue simmered under the surface but never erupted into outright warfare.

When he left all hell broke loose. Two staffers, Assistant City Manager Horatio Skeete and City Attorney Craig Tindall, were within shouting distance of grabbing ultimate power, that of Interim City Manager. Both probably felt that an outstanding performance could land them the job permanently. Each had their supporters and detractors but vied for the job in dramatically different ways. Craig Tindall’s supporters, were rumored to include among others, Jim Colson, Economic Development Director; Julie Frisoni, Communications and Marketing Director; Fire Chief Mark Burdick and City Auditor Candace Macleod. It is assumed that they knew or at the very least had suspicions of or had heard rumors about the ramifications of the ERP before its eventual disclosure. If they knew and said nothing until disclosure became useful then they are complicit in the cover up. They finally released information about the Trust Fund transfers and the Employee Benefit Program in an effort to smear Skeete. There was no mention of the City Attorney Office’s failure to provide oversight over the ERP. We’ve all heard the phrase that ignorance is no excuse in the eyes of the law.

This information was released despite the fact that these decisions were Beasley’s, not Skeete’s. After all, Pam Kavanaugh as Assistant City Manager began the implementation and then retired. When Skeete assumed that role, he was tasked with continuing the implementation. I once asked Skeete why he didn’t play the same game and he told me that was not how he wanted to get the job. There were no monkeys on Skeete’s desk. Council chose Skeete as Interim City Manager and rejected the tactics employed by the Tindall faction.

If council had been informed of the facts when the ERP was first implemented different direction would have been given to the City Manager. To say we were not informed by city management is an understatement. Many of the allegations came to light after Beasley had retired. If the Workmens Compensation and Risk Management Trust Fund Boards had been told the truth reforms could have been instituted.

Now there is a new regime in city management with a new City Manager and soon, presumably a new City Attorney. Heads are rolling with Bolton, Goke, Schurhammer and Skeete placed on administrative leave. It is a strong signal that poor decision making based on a lack of integrity will not be tolerated. The first appointments by City Manager Brenda Fischer are Frisoni as Acting Assistant City Manager and Macleod as Interim Finance Director both of whom appeared to have been actively embroiled in the Interim City Manager warfare. What about Jamsheed Mehta, Stuart Kent, Jon Froke and Erik Strunk who kept their noses clean, hunkered down and did their jobs? What kind of signal has been sent through the organization? House cleaning of a selected few while others suffer no retribution for their actions or lack of disclosure until it became useful does not bode well.

AND THERE’S MORE

The call for an external audit was Norma Alvarez’ baby aided and abetted by a newspaper, the Glendale Star, that appears to have become the mouthpiece for her agenda. She obviously hoped for two outcomes from the audit: finding a pot of gold that somehow had been overlooked; and placing blame directly on former councilmembers. Neither outcome was achieved but it has made her vindictiveness apparent for all to see. She had publicly stated that after the external audit became public she would resign. To date that has not happened but it should. Her contributions to Glendale governance are non-existent. Now she says she will not run again in 2014 but reneging on her promise to resign now signals that she may change her mind as it gets closer to the time to declare reelection intent.

AND THERE’S MORE STILL…MUCH, MUCH MORE

Then there is the question of former mayor Scruggs. Was she involved? That is your decision to make. She has many supporters to this day who will reject the notion of any involvement. I am not a supporter having worked with her for 16 years. Many inside and outside of City Hall were quite aware of her ambitions and her modus operandi. We were never personal friends and for many years were often diametrically opposed on policy issues. Various staffers would often remark privately that there was nothing that went on in Glendale that she did not know about and either approved or disapproved.  In retrospect it appears that this assertion by those staffers seems to be quite accurate.

Below you will see 2 emails that require some explanation.  A Glendale resident, a very intelligent gentleman, now deceased, who had been CEO of several well known national corporations, became concerned about the bonds being issued by Glendale for construction of the arena and surrounding infrastructure. He made a series of Freedom of Information queries. During the course of his inquiries he often updated his progress via email. These are but two of many. The first email forwarded to me relates to the former mayor’s treatment of this gentleman after he spoke publicly about his concerns. The second email on which I was copied, confirms her extensive knowledge of arena finances and her need to know everything. The names of individuals and the topic raised at the time are not pertinent to the illustrations being used to offer some insight into her behavior.

First email********************

From: XXXXX

To: XXXXXX

Sent: Monday, April 17, 2006 6:05 PM

Subject: Re: FOI items for Friday

I included the entire exchange because this XXXX gentleman (XXXXX) is asking Glendale some critical questions about the Arena deal. They aren’t answering. He went to Council, waited until the end and stepped up with his questions. Elaine took him aside and berated him for saying these things on Glendale TV. She “doesn’t want the sort of thing out there for the citizens who don’t understand to see”. Scroll down to the last message he sent me. Elaine listened in on a conference call this man had with the financial people of Glendale. She is hiding something…he is close to it….

Second email******************

From: XXXXXX

To: XXXXXXXXX

Cc: XXXXXXXXXXXXXXXX

Sent: Monday, April 17, 2006 6:37 AM

Subject: Re: FOI items for Friday

Hi! I called Mr. Schuey (sp.?) at nine am on Friday, as planned, for an hour. I said that I expected to talk primarily to Steve Szymanski because he is closest to the data I desire. He said Steve’s boss would be taking his place instead. I asked who was on the line with him. He said that Steve’s boss, Art Lynch, Mr. Perkins (sp.) and Mayor Scruggs were also there!!!! I wasn’t surprised. I couldn’t tell who was doing the talking, but at least the Mayor kept silent (an amazing act of constraint). With such a large cast of characters, I didn’t expect much. They did clarify some things. 

For example, they said that 4 bond issues were for infrastructure only ($30Million), so not with the Taxable, Tax exempt and a small issue associated with the Arena. All together, the total bond amount is $180Million (Arena plus infrastructure). “They” said that I should only be concerned with the Arena bonds, even though in the budgets all six were together. They said that two of the smaller bonds had been dedicated to other purposes via ordinances passed some time ago. In summary they seemed to be defensive on this small issue. I said that I would concentrate on the two Arena bonds and one small one ($150Million), which is my main interest.

 

They went on about their AAA rating and that Mr. Perkins was their expert, etc, etc. and that they had sculptured the Bond allocation to make it easier to keep the early years payments lower so that their payments would not be too tough at first.

 

This was said because I had previously told Art that the distribution used caused a lot of excess Interest. They don’t like criticism.

So, not much accomplished.

Regards, XXXXXXX

These emails are illustrative of the belief by some people that the former mayor was involved in the slightest minutia of Glendale operations and especially when the issue was a “hot topic.”  What did she know about the Early Retirement Program (ERP) and when did she know it? According the findings of the external audit report the ERP was initiated in March of 2009. At the end of the same month (March, 2009) at the first FY 2010 council budget workshop it is now evident that she had knowledge, not readily available or shared with the councilmembers, of the program’s costs as can be seen from the questions and statements she made relative to the issue. Her actions raise more questions that remain unanswered. Many readers of this blog have knowledge of or examples that attest to her intense and perhaps sometimes, inappropriate, involvement in city affairs. If anyone cares to share please send an email to clarkjv@aol.com. Your information will be handled discreetly.

There you have it – the players, the City Hall climate, the actions taken and the repercussions. It’s not a pretty picture. If you are as angry and disgusted as I, you have every right to feel that way. It’s a bitter chapter in the history of Glendale that occurred on the watch of former City Manager Ed Beasley (retired 2012)/Interim City Manager Horatio Skeete (on administrative leave, 2014) and former Mayor Elaine Scruggs (retired 2013). The mushrooms were former Vice Mayor Steve Frate (retired 2013) and Councilmembers Clark (me, retired 2013), Martinez, Lieberman, Knaack and Goulette (former Ocotillo CM prior to 2010)/ Alvarez (current Ocotillo CM from 2010 to present).

The reforms and controls that will be adopted will help to restore confidence in a financial system run amok. Could it happen again, if not in Glendale, somewhere else? Yes because we are all fallible and can make disastrous decisions. You cannot legislate good character, morality or integrity.

©Joyce Clark, 2013

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