What Are We Doing?

City’s finance department: Better or worse? (February 23, 2002)

Third in a series that resumes Wednesday.

By JOURNAL STAFF WRITER Christofer Machniak

Flint — During his State of the City speech this month, Mayor Woodrow Stanley hailed how the city completed its annual audit four months earlier than last year to show progress in reforming the troubled Finance Department.

But backers of the March 5 recall election like to point out the 2000-01 audit was still 30 days late.

Failing to provide financial records and account data for a timely 2000 audit is the third reason Citizens United for Better Government cites for ousting Stanley. If an administration has 10 years of experience and has the temerity to brag about a failure … then this administration is demonstrating it’s an incompetent administration, said Sid Edwards, a spokesman for Citizens United.

But city officials said getting the audit sooner illustrates a Finance Department on the rebound. Following the start of a City Council investigation into the department last summer, Stanley assembled a task force of community and business leaders that recommended an overhaul, including a new finance director and nine workers.

Only half of the workers have been hired and the mayor’s nominee for finance director still needs council approval. But enough progress has been made that extremely late audits should be a thing of the past, said City Administrator Darnell Earley.

Earley said removing Stanley now will only jeopardize the progress made in fixing the department.

We’ve certainly turned that corner, Earley said. The reforms that we’ve put in place are giving us now a much more pro-active posture.

But recall proponents said voters shouldn’t forget the past, in which the city has been late with audits for the past five years. The resulting inability to provide timely and accurate financial numbers slowed decisions in responding to the $28.4-million debt.

The department’s difficulties began with a brain drain in the finance office following an early retirement program in the mid-1990s. Council members also charge the department experienced a lot of transfers in and out, blaming poor management skills on former Finance Director Marc Puckett.

The loss of talent, combined with problems associated with the Y2K conversion and making the city’s new computer systems work together, overwhelmed the department when Matthew A. Grady came to the position in early 1999.

Grady, who had been budget director, took over from Puckett, left his job under a cloud in the wake of the discovery that he failed to transfer about $20 million to the pension system, which cost the city about $1 million in interest.

Problems with productivity, skills levels, and accountability led the city to bring in financial consultant Arthur Andersen to provide management advice. The lack of available trained staffing led the city to pay auditor BKR DuPuis & Ryden to perform some of the work.

When I first got down to the Finance Department, we were fighting for our life, you know, that’s the only way I can describe it, Grady said during testimony given during a council hearing in September on the problems.

But Grady also testified that his department made significant progress in many areas, including resolving a $21-million property tax problem with the state and problems the city had in improperly distributing tax money to other entities.

Despite the progress, the city still couldn’t provide the council with the information it wanted, which led to spending the council never approved. In addition, the information gap led to credibility problems that have kept the mayor and council mostly at odds over the past two years.

Earley said council confirmation of the new finance director, Peter Dobrzeniecki, will go a long way to sustain reforms.

But Edwards said the Dobrzeniecki decision is just another example of Stanley’s poor choice of appointees. Dobrzeniecki’s contract as finance director for the city of Eastpointe was not renewed in 2001 by a 4-1 City Council vote. Ten years ago, Puckett lost the same job in Eastpointe, by the same vote.

City officials say both votes were politically based, but Edwards finds the decision to get someone who lost his job from the same city too typical.

The leadership in the Finance Department is sorely lacking, Edwards said. I don’t think the Detroit environs is the only area to produce such people because the ones they’ve sent haven’t performed to what I expect.

Christofer Machniak covers Flint city government. He can be reached at (810) 766-6304 or [email protected].

Copyright Flint Journal / MLive Media Group (mlive.com). Used with permission.