Lack of oversight costs taxpayers millions City staff is starting to prepare the budget for FY 2009. That means it’s time to continue the quest to analyze the cost of city government, and look for waste, possible fraud or irregularities. At one time Pompano Beach had a Budget Review Committee, consisting of highly qualified citizens appointed by the city commission, to advise both the budget processors and elected officials about the nuances of funding city government. The concept was perfect – it was designed to be a win-win situation when residents with qualified financial backgrounds could give guidance, input and advice on how to streamline city finances. But some of the members asked too many delving questions, and irritated C. William Hargett, Jr., the former City Manager. Hargett didn’t believe in transparency, did not want to be held accountable, and absolutely did not want ‘ordinary citizens’ comprehending, much less questioning, his financial maneuverings. The solution was simple: he engineered the demise of the Budget Review Committee with a majority vote of the City Commission. That has almost assured that the complex financial data that constitutes the City’s budget will remain unanalyzed by anyone who could understand and question its legitimacy. Almost. It may not be easy to find sneaky little tricks in the budget, but if you get a tip on where to look, or if you happen to stumble on something that just doesn’t look right, it becomes a possibility. In looking at salaries, hiring practices and independent contractors, it became clear that there are two special accounts that need scrutiny: the ‘Professional Service Account’ and the ‘Special Legal Account’. Both accounts are used to pay independent contractors who provide services to the city of Pompano Beach. The city budget prepares for such contingencies by creating allocations or budget amounts to cover the costs for independent contractors. These include people who are not city employees but who provide independent services to the city, sometimes through a company they set up. These services often cost the city many times what qualified city employees would have cost, even with employee benefits. Professional Service Account From the Professional Service Account, former city manager C. William Hargett, Jr., was paid $22,031.25 from May 17, 2007 through January 4, 2008; and former assistant city manager T.C. Broadnax was paid $16,350 from January 23, 2007 through January 8, 2008. Both of these incomes amounted to part-time employment. Neither Maurice F. Bush nor Clark Cogswell are city employees, but both took home some serious part-time incomes, working as part-time building inspectors. Bush was paid: FY 2007 - $254,025 FY 2006 - $215,772 FY 2005 - $123,287 FY 2004 - $108,652 FY 2003 - $90,292 Cogswell was paid: FY 2007 - $99,322 FY 2006 - $94,575 FY 2005 - $62,865 FY 2004 - $62,910 FY 2003 - $59,220 But there is more – much more. I took a look at the Professional Service Account that has been pre-budgeted for contingencies of independent contractors and found the allocated funds were assigned as follows: FY 2008 - $1,522,864 FY 2007 - $1,537,137 FY 2006 - $1,289,711 FY 2005 - $1,463,926 FY 2004 - $993,358 FY 2003 - $927,789 FY 2002 - $924,372 Whoa! Now those are some serious dollars, but what is interesting is that the actual spending in that account is completely different from the budgeted amount in every fiscal year since 2002. Commissioners may tolerate the budgeted amounts, but do they realize that the city overspends the budgeted allocation by 15 percent to 40 percent – year after year? On the surface, it appears that the final preparer and presenter (in those years it was C. William Hargett, Jr., the former city manager) of the budget learned anything from the previous years – or spent any time on actual costs. It looks like he just took the previous year’s allocation and adjusted it by a small percentage to cover for phantom inflationary costs. That way, I suppose, this account would end up being lost in analysis or tucked away within a larger grouping, and neither commissioners nor citizens would be aware of the actual substantial differences. Actual expenditures from the Professional Service Account were: FY 2008 - $823,137*   *as of March 11, 2008 FY 2007 - $2,385,693 FY 2006 - $2,550,242 FY 2005 - $2,038,071 FY 2004 - $2,815,407 FY 2003 - $2,335,233 FY 2002 - $1,013,229 How bad was the overspending? FY 2007 - $848,556 FY 2006 - $1,260,531 FY 2005 - $574,145 FY 2004 - $1,822,049 FY 2003 - $1,407,444 FY 2002 - $88,857 The major discrepancies between allocated or budgeted figures versus actual spending are not the only concerns we should have with these two accounts. A nagging question persists – who benefits from these accounts, what do vendors get paid, and who at City Hall chooses the participants? Using Freedom of Information Request protocols, I asked for a list of the vendors for FY 2008 and 2007 just to get a sampling of the top five vendors in each of the accounts. I suspect that the results were indicative of the years gone past. In FY 2007, the Professional Service Account was tapped to pay: (1) Changing Directions 4 Youth, $439,891 (a grant for children’s services); (2) Bush Consultants, $254,025 (building department); (3) Staffing Connection of Fort Lauderdale, $376,019 (crossing guards); (4) SCM Consultants, Inc., $99,322 (building department); (5) Limousines of South Florida, $97,442, (bus route grant funding). So far in FY 2008, the Professional Service Account has been tapped to pay: (1) Staffing Connection of Fort Lauderdale, $216,722 (crossing guards); (2) Changing Directions 4 Youth, $141,674 (a grant for children’s services); (3) Limousines of South Florida, $89,199 (bus route grant funding); (4) Bush Consultants, $74,625 (building department); (5) Robert Loring Enterprises, Inc., $47,408. The first vice chair of the Budget Review Committee was Alan Stuparitz. He’s a local accountant, and an enrolled IRS agent (meaning he can practice before the IRS, like a lawyer). Like other members of the Committee, Stuparitz is well versed in finance. The members of the committee took their roles seriously. If they were going to donate their valuable time, they wanted to be professional about it. This was no rubber-stamp group. But being confronted by inquiring minds – minds which understood finance – was not consistent with Hargett’s smoke-and-mirrors style of managing City finances. As Stuparitz and other committee members began raising concerns about special accounts, transfers of funds, and line item overruns, they began to face political headwinds. Hargett resisted giving the committee information during the formulation of the budget, and the committee saw the budget in the same time frame as commissioners. That made it impossible for the Committee to make recommendations to the commission, and that was quite satisfactory for Hargett. At that time, the Chamber of Commerce and Hargett had a much-too-cozy relationship, and several commissioners were tightly aligned with the Chamber-Hargett coalition. Efforts to get commissioners to require staff to cooperate with the committee were fruitless. Stuparitz called the whole thing ‘a clown show,’ and Hargett ‘the head clown’. “I failed to see any solid accounting justification for the City’s financial procedures,” Stuparitz said.  “It was like trying to blend tacos and tequila in a bowl, when one should be used as a chaser for the other.  Sorry for the analogy, but I know no other way to put it.” Stuparitz left the committee in disgust, and Hargett was not disappointed. But Stuparitz wasn’t the only inquiring mind, and before long Hargett had had enough. A little pressure on commissioners, along with some bogus justification for the public, and the committee was dissolved. Special Legal Account The Professional Service Account is probably the worst of it, but that’s not all of it. The Special Legal Account, set up to fund outside legal counsel to the City, has been budgeted as follows: FY 2008 - $150,650 FY 2007 - $150,650    FY 2006 - $150,650        FY 2005 - $150,650        FY 2004 - $152,000 FY 2003 - $102,000 FY 2002 - $123,000 Once again it doesn’t appear that the final preparer of the budget learned anything from the expenditures of previous years in this account – or spent any time on actual costs. Again, they just seemed to use the previous years allocation and added a small percentage to cover for phantom cost escalations. This account, too, would end up being lost in analysis or tucked away within a larger grouping. Again, when looking at the allocated funds to prepare the budget, the actual expenditure does not reflect the actual spending: FY 2008 - $73,804*   *as of March 11, 2008 FY 2007 - $161,955 FY 2006 - $344,914 FY 2005 - $439,062 FY 2004 - $322,667 FY 2003 - $310,689 FY 2002 - $139,316 How bad was the overspending? FY 2007 - $11,305 FY 2006 - $194,264 FY 2005 - $288,412 FY 2004 - $170,667 FY 2003 - $208,689 FY 2002 - $16,316 The top paid outside attorneys in FY 2007, were: (1) Weiss Serota Helfman was paid $50,870 for work for the City, and an additional $121,859 for work for the CRA; (2) Ackerman Senterfitt and Edison, PA, was paid $57,475; (3) Lewis, Longman, & Walker, PA, $41,710; (4) Barry S. Balmuth, PA, $47,000 for work for the CRA; (5) Hunt & Gross, $22,149. So far, the top paid outside attorneys in FY 2008, are: (1) Weiss Serota Helfman, $12,920 for work for the City, and an additional $103,936 for work for the CRA; (2) Akerman Senterfitt & Edison, PA, $45,508; (3) Brigham Moore LLP, $21,375 for work for the CRA; (4) Law offices of Paul T. Ryder, Jr., PA, $8,448; (5) Eugene Steinfeld, $2,000. Should Pompano should hire a full-time litigation attorney? I’ll bet we could get more bang for our buck. On the other hand, that’s a question a professional budget review committee would be asking. Smoke and Mirrors Finance If memory serves me, the Budget Review Committee was dissolved in 2003 or 2004. The figures above show major discrepancies between budgeted line items and actual expenditures beginning with the 2003-04 budget. Interesting timing, is it not? When studying both of these two accounts, one gets the distinct impression that Pompano’s budget process is a shell game with numbers moving around so deftly that, ultimately, commissioners will remain confused and residents will not be able to understand the reality nor determine the true costs of running a city, and it will become impossible to prevent waste in government spending – waste that goes into favored persons’ pockets. During the years that the Budget Review Committee was acting as a watchdog, members were concerned about the procedures for obtaining ‘bids’ on contracted out source work. Members openly questioned the loopholes in the ordinance addressing “Services requirements” to obtain bids on certain types of contracts – and some members of the committee even called them sweetheart deals. This especially surfaced when the Budget Review Committee members were looking at expenses related to outside services of Keith and Associates / Keith and Schnars, active members of the Chamber of Commerce and big campaign donors. Since the city has a full-time Engineering Department, members questioned why so many contracts were outsourced – with minimum competitive bidding. The first Budget Review Committee chair, Ralph Calatchi, along with committee member Al Shackles, questioned why these accounts were being funded on an ‘as needed’ basis with only a small amount earmarked during the budget process. Those questions irked Hargett. Commissioners either didn’t realize this or were influenced not to care, so they didn’t ask questions. After the fact, the issue became whether the process was used to divert funds from other accounts and whether or not any of these transfers were subject to public input or Commission review. Stuparitz said he was always concerned about whose job these contractors were supposed to be doing. If the city employees, who are suppose to be absorbing this work could not complete the work, because there were too few people or they were not competent to do so, then something was broken and should have been fixed. Stuparitz said he couldn’t remember any commission member (other than District 1 Commissioner George Melcher) ever asking if the process was broken or if the staffing was sufficient, or if the city employees were sufficiently trained to do the job. “These questions should have been asked – but our elected officials acted as if they didn’t understand or didn’t care,” said Stuparitz. For years now, the Budget Review Commission has been out of existence. There is no independent citizen oversight or input. If you attend the budget review process, you will quickly notice that commissioners do not ask the correct questions or probe for explanations. None of them actually have the education or training or experience to do so cogently. Hopefully, we will someday have a city commissioner who will ask some of the difficult questions – and demand serious answers. McGinn clearly failed to understand the process, the concepts, or the impact. It was all about bamboozling a gullible electorate in order to get a paycheck to supplement her meager earnings as a picture frame purveyor. In recent years, Brian Donovan, Pompano’s budget officer, has followed Hargett’s instructions and has prepared excellent presentations. That’s his job and he has been masterful. But commissioners rarely asked the right questions, and when a perceptive question was asked, it was not answered. That type of question seemed to irritate Hargett, and he successfully shifted the question to some obscure point rather than addressing it head-on. The process was over commissioners’ heads, so they just accepted whatever Hargett said. With the anticipated income stream, there are serious problems to be solved. Will there be cutback in services, staff reductions, or elimination of programs? This will be the first budget prepared under City Manager Keith Chadwell, and he will be responsible for its accuracy and viability. This past year’s budget was prepared under Hargett’s watch, and Chadwell cannot hide behind Hargett when this one becomes a problem. With the budget process starting early this year, it would be wise for citizens to be interested enough to attend those hearings. Budget meetings are open to the public and the public has the right to ask questions and advise their respective city commissioner if they see something that does not make sense. Taxpayers need to be represented by professional surrogates on a budget review committee. Pompano taxpayers should demand a budget review committee with the authority to do its job. Perhaps we should put that committee in the charter, so rogue commissioners can’t dissolve an inconvenient committee and maintain smoke-and-mirrors financial procedures and policies. Don’t hold your breath. A commission that seems reluctant to approve a charter amendment to protect public properties from being donated to developer friends, is not likely to entertain a financial watchdog committee, especially as part of our charter. I suppose that in the big picture, politicians always prefer smoke-and-mirrors.