Culture of Failure

Sloppy accounting
(source: Editorial, Cape Cod Times 12/29/09)

With a new business manager and, before long, a new superintendent and deputy superintendent, Bourne residents can hope that bookkeeping blunders and surprise deficits at the schools will soon become a bad memory.
Meanwhile, they should remember two lessons from the accounting mess reported by an outside auditor.
One is the value of a smart and experienced financial manager and staff — exacting people who know the rules and practices and consistently get things right in their accounting.
The other is the value of a second set of eyes — administrators and department heads reviewing financial reports, matching budget and expenses, making sure their line items are reported correctly.
The Bourne school system seems not to have met those requirements. So reported the auditor retained by the town to explain the school deficit that caused a turmoil last summer and recommend "internal controls" to prevent future deficits.
The deficit was discovered only when the town's finance director tried to match school expenses with the approved budget at the end of the fiscal year in June and discovered a gap of somewhere between $300,000 and $600,000.
That news, plus a cut in state aid, cost the jobs of two assistant principals, three teachers, a bus driver and a bus aide; it caused cutbacks in custodian and lunch room monitor staffing and other belt-tightening measures; it forced a major reshuffling of classroom positions.
The actual deficit proved to be $370,740, the report says. The auditor found unbudgeted payroll costs of $415,940 and unbudgeted school lunch costs of $126,152. Somehow, $243,473 in "impact aid" (for teaching children of military reservation families) got counted twice and that certainly was a major problem.
Item after item, the audit reports such inanities as "transportation costs should not be classified as salaries" and "refrigeration repairs...were recorded to a substitute teacher salary account... ." How could "telephone services" wind up in a fuel account? How could the business office overspend because "consulting services totaling $27,115 did not appear to have been budgeted... ."?
Documentation for expenditures and for accounting changes often seem to be skimpy. The auditor urges that the business office "eliminate making manual adjustments to the payroll journal," which are "time-consuming and susceptible to human error... ."
The business manager has left, but the problem doesn't end with confused bookkeeping entries. Why weren't the mistakes noticed? Didn't the person in charge of spending for substitute teachers notice he or she was being charged for refrigeration repairs? Don't the principals and department heads study financial reports?
Maybe that's the problem. One of the "primary reasons" the deficit was allowed to develop was the "lack of monitoring the school budget on a line-item basis," the report concludes.
The auditor doesn't say who should monitor, but the target is pretty clear. The superintendent and deputy superintendent have announced they will retire next summer. Their successors don't need to be accountants, but they need to understand financial management.

Why publish this recent editorial by the Cape Cod Times related to the Town of Bourne's School Department's abysmal record of internal financial controls? Because when I worked at DOR we had to examine similar problems on theTown AND School sides of Bourne's financial operations. That was almost 20 years ago. So, you may ask, was I surprised to see this editorial about problems of the most basic day to day operations of how the Bourne School System deals with their budget? NO.

That is because the type of shoddy accounting and auditing procedures in any community have a historical imperative. It's almost as if a lack of repsect for the correct way of doing the simplest things gets lost under the great weight of prevailing culture and the values that culture and custom reflect. Obviously, in Bourne, after several warnings and serious consequences due to poor performance of simple, yet necessary procedures, they once again need retraining and hiring of the top management postions. And even in a School System, a Superintendent is a manager first and overseer of education second. Or they should be.

How does this relate to Fall River? Well, aside from the fact both communities share an ocean view and long bridges for which they are famous, I believe they also share an obvious disdain for doing things the way they should be done in a day-to-day business procedures sense. It is obvious to even the casual observer that doing things the right way simply because it's the right way to do them is not high on this City's priority list, and never has been.
While the elected officals in Fall River pay lip service to good administration, they sit by without truly understanding whether those doing the jobs of Finance Director/Treasurer, Tax Collector, Property Tax Assessor, City Auditor and finally, on the City side of things, The Auditors of the City's financial operations, are doing their jobs adequately, let alone well. While the Mayor is directly responsible for appointment of these individuals, and must make final determination of the quality and competence of their and their departments work, the City Council also plays a substantial role in monitoring just how effectively these people perform. Afterall, the final approval of requested budgets is only a part of their involvement.
The part of checks and balances that exist in a City with a strong Mayor form of government like this one mandates that, necessarily, the City Council  monitor progress of all the operations in this City, but particularly the engine that collects and expends tax dollars to keep city services moving. In fact, it may just be the most important thing the City Council does, their REAL reason for existing. At a minmum  I would expect to see a truly committed City Council  request what amounts to workplans and goals and objectives for each financial operation in the City. This could be set by the Mayor with the Council's input, but made as a condition of budget approval. That way there is a formal insistance on legal, competent, and hopefully eventually, "motivated to excellence"  performance. Right now, as we have seen these past two years, nothing like that comes close to existing. The more resolute City Council would serve as an effective counterbalance to a Mayor who may wish to steer this City in the wrong direction for personal gain, or simply out of pure ignorance of how things SHOULD be done.
There is simply too much evidence, historically, that the City itself does not place a high enough value on excellent performance of it's managers. It lacks even the most rudimentary methods to measure the job performance of managers. Goals and objectives don't even exist as viable, measureable concepts to the City Council. Excellence in performance has occurred by luck or the "golden hire" or two, people self motivated to do things well because they demand a level or personal excellence in all things they do. But that, clearly, has not been the case in Fall River as the norm. It seemingly cannot raise itself beyond the dictates of local controlling politics, the type of controlling politics that perpetuates poor performance because it does not make excellent performance it's primary objective. Convenience and control are all that are valued. It is this half hearted commitment and customary lax attitude towards excellence that allowed the truly egregious behavior of Mayor Correia, and his phalanx of all too willing incompetents too afraid of their own shadow to stop the madness we now have to deal with. And simply electing a new Mayor and replacing the toadies who aided and abetted the great rape of Fall River by Corriea, his top managers and staff, will not make the difference to turn Fall River around and once again put the City in the black unless there is a major, generations long committment to excellence in performance. It will take everyone involved to make this happen.
It takes a village to raise a child, but it also takes a village to raise expectaions as well. Goals and objectives must be promulgated for each City department, and the level of resource allocation as shown through budget funding has to be explained and defended each year in terms of reaching those goals and objectives. There is no better proven way to demand, and get, excellent performance from a qualified manager.
But this is not enough. I have never felt that this City's motto must be changed more than I do now. "We'll Try" bespeaks boldly only of feckless failure. It raises Fall River excellence to the level of mediocrity. Fall River has not been a successful going concern for generations now. I'm not spending much time worrying about a movie theater that has long since closed. That is for others to worry about.
What we all must be directly concerned with is establishing a tradition throughout this City of expecting and supporting the very best out of the people we hire to run things. It's not the resource level committed to the effort. Plenty of money has been spent trying to improve things. It's a real , city-wide commitment to expecting the best from the people we hire for them to do the right things for the right reason.. Phony slogans like "Pride, City Wide" will only become the object of derision, and as we have seen,  a sad irony given where we are now after the short reign of the man who foistered that slogan on a City wanting to believe. We all want to believe. This is one of the few areas where Fall River can start over from scratch.