Barking At Financial Reports

Budget scrutineer John Marshall Lee is scheduled to address the City Council Monday night on the topic of “budgets and oversight.” Full council agenda here. In his latest commentary Lee wonders where’s the financial accountability?

I am writing to my friends in Bridgeport about public money. You already know that our taxes are high. I write to tell you today that our representation on financial matters is low, very low. For several years I have served with others as a “fiscal watchdog” barking about issues that have prevented the public, and the City Council committees, from dealing with what the administration is doing with public money.

I have reported that the Finch administration has violated the Charter almost monthly with late reports. And they have failed it again at year end for over 20 years when no Final Monthly Financial Report is prepared for distribution (after year end adjustments when the numbers are released to the external auditors). I have noted that the Council Budget Committee does not monitor the reports at their meetings. I have noted Council ignorance of Ordinances, specifically around City Purchasing, where annual reports and triennial audits have not been produced. The City also violates the Charter annually by failing to solicit public comments on the capital budget when there is no such invitation or meeting.

What may seem only an annoyance to some regarding fiscal reports has become a substantial cause of concern. Currently monthly reports by the City that purportedly display the operating budget contain errors, missing data, as well as narrative headings and tools that would earn a high school bookkeeping student a failing grade. The City uses the MUNIS system. An Excel format is provided each month. This format has changed several times in recent years, not always at the request or direction of the Budget Committee. When sections of the format are deleted that have provided valuable information, something major is lost. When changes in column information occur, one reporting time period is not easily comparable to another. When errors in underlying formulas are observed or columns are not fully used, does a serious question arise as to whether the City Finance Office is concerned with presenting fair and accurate info?

Earlier this fall while waiting for a Budget and Appropriations meeting to commence with a four person (of seven) quorum, I asked Ann Kelly-Lenz, “May I ask you a question?” since we were sitting next to each other, otherwise unoccupied. She replied, “I choose not to answer questions.” So be it. I wanted to bring to her attention that the July and August, 2013 reports had some problems with Excel formulas. Two columns were added together to produce a “Remaining Fiscal Year Forecast” that was in error. (In fact, one column should have been subtracted from the other to obtain an accurate result.) When the Finance Officer was not interested in discussion, I reported it more than once in writing. This error has been corrected subsequently but her initials were on multiple reports that were distributed.

Were there other errors of commission and/or omission? For review purposes I selected the January 2012 monthly financial report to compare to the October, 2013 edition. The 2013 report indicates: “The trend is still on budget at this time.” You might well inquire as to “What trend?” Were you to turn to the second page of the ‘fourth month report’ the annual approved and projected “revenues” and “expenses” are each listed at $517,105,830.00 with a $0.00 sum on the “Net Surplus (Deficit)” line. In 2012 we were able to see “FY End Projections” and “Surplus/Deficit” information for both income and expense that revealed less revenue and increased expenses relative to the budget to the extent of $3,804,067 DEFICIT. A Council person could ask a question in that case.

The January, 2012 copy contained four pages of narrative descriptions of “Revenue” differences, as small as a loss of $15,000 expected “cost recovery revenue” to comply with a heading stating, “Any revenue that is known to have significant variance by the end of the fiscal year has been indicated and explained below.” In all monthly financial reports for 2013, not merely the October report, this heading has been missing. So have the narratives. Were City administration proposed budget projections from March 2013 presented to the Council so prescient that no variances need be indicated four months into the actual budget year? Where is the Charter-prescribed reporting of variances?

Twelve pages deeper into the January 2012 “Expenditures” section begins with two pages of narrative variances previous to 56 pages of Appropriation information. There are no such narrative entries in the 2013 report regarding variances, as there are no variances noted! Can we assume that the dollar amounts noted for each line and column intersection are accurate? Where is the “Variance” column for “Expenditures?”

Additionally troubling are the differences in the column headings where only seven of thirteen current columns remain the same for the two different time periods. The new columns are not bad themselves and allow monthly comparisons to the month in the previous year, for instance. However, in the 2013 report the final “Revenues” column is marked Variance and shows only zeroes. What is going on here? Is there no Excel formula in operation? Why not? Variance reporting is required by the Charter. (The 2013 “Expense” reports eliminate the final Variance column. Who made that decision? What is a Council person to understand from that absence? This is a Charter violation issue!)

Aside from the absence of descriptive headings that creates difficulty for a reader of the 2013 report format, the most glaring error is the operation of a column called “FY%Actual.” What is the meaning of this column? Is it to provide a percentage ratio of the actual total each month to the annual budget, or remaining forecast, or what? (Several different formulas are observed throughout for different line items. Why is that?)

The report itself attempts to track over $500 Million of revenue and expense by Bridgeport. The monthly report, were it timely, easy to read, with narrative explanations as formerly provided, can be a good basic tool for governance oversight. The tool is broken and needs rapid repair. When it is repaired it needs regular and determined oversight by a caring and motivated Budget Committee that promptly brings in competent staffing to assist in its work if necessary. There are other issues relating to Open, Accountable and Transparent fiscal governance in Bridgeport, but a prompt start by the new sitting Council in this regard, will work wonders. Time will tell.