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State controller’s office not the way to go

By: Carol Feineman, Editor
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Transparency was the March 8 City Council meeting theme. That topic began during public comments centering on the recall and continued through the council-initiated portion. That’s when City Council and audience members alike wanted to send a letter to the state controller’s office to determine whether council members and city staff acted appropriately. The City Council majority and audience members were optimistic that a state controller audit would restore trust of local government to residents. With the exception of Councilman Spencer Short, the four other council members were anxious at the March 8 meeting to immediately send the letter asking for an audit to the State Controller’s office. This is the second of two letters drafted by a Lincoln city councilman, in this case, Tom Cosgrove, within the last two months to clear the council and top city management of wrongdoings. Those wrongdoings are regarding city accounting practices and the disclosure of the misallocated $3.2 million to the General Fund as it relates to the utility users’ tax on November’s ballot. Short sent a letter Jan. 19 to the Fair Political Practices Commission, cced to the attorney general and the governor, asking them to investigate any perceived wrongdoings by city staff and council. The commission responded to Short on Jan. 21 that his letter’s allegations did not fall “in the purview of the Fair Political Practices Commission.” All councilmen at the March 8 meeting agreed that sending a letter to the State Controller asking for an audit would help the public have more faith in city officials. Short, though, asked for a special meeting on March 11 so that he could see the detailed list of issues that Cosgrove and Joiner planned to finish before sending the letter. Cosgrove’s letter, fine-tuned by Mayor Paul Joiner, requests that the state controller’s office audit the city’s financial information back to the year 2005. But, while trust has to restored, the council is asking the wrong agency for assistance. The state controller’s office is not the solution. "We have autonomy over the use of state and federal funds, not local funds," said Garin Casaleggio, deputy communications director for the state controller’s office. “When it comes to local funds, fees and bonds, those are outside of the existing controller’s office purview,” Casaleggio said. The state agency typically does not look at local financial records. "For the city of Bell, we did an audit as an anomaly," Casaleggio said. “The interim city manager requested the controller to look at finances, the controller did it on the condition all the books were opened up last summer. They asked us, after a revelation of allegations such as the salaries of $1.6 million for three officials. As soon as we went there, we found illegal pension assessments, we went so far as to look at independent financial audits and audited the CPA firm as well." State Controller John Chiang is sponsoring four bills that would provide greater financial oversight of and assistance to cities, counties and special districts. “The city of Bell has been a vivid illustration of the devastation that can occur when there is little accountability over how local dollars are spent in our communities,” said State Controller John Chiang in a Feb. 8 press release. “It is time for the state to have a role in making sure sound fiscal management is being practiced at the local level so that all public dollars are protected.” But the state bills are just in the embryonic stages. "The law is structured that local city oversight is in the hands of the local government," Casaleggio said. However, if an unanimous City Council asked the State Controller’s office to audit the city, Casaleggio said the request would be considered. “It depends on what we’re looking at – we can look at state and federal funds,” Casaleggio said. Besides receiving an “impartial objective response from the state controller’s office,” Cosgrove indicated at the March 8 meeting that the audit would be free. “One of the side benefits of taking this step is it doesn’t cost us anything to do it,” Cosgrove said at that meeting. “If they do it, which in fact I hope they do, it doesn’t cost us anything.” Local governments pay the fees, according to Casaleggio. “If and when we receive a letter of this sort, we still have a question of who would pay for this activity,” Casaleggio said. “In the county of Modoc, for example, we found the county had illegally loaned $14 million in restricted state and county funds to pay for General Fund expenses in that particular county. They’re still paying for our cost of us doing the audit.” Government code section 12464, according to Casaleggio, says the controller can require that financial reports are done at their (local governmental) expense” if there is any reason to believe reports are false, incomplete or incorrect. If City Council members want to “build credibility with our citizenry,” as Councilman Stan Nader said at the March 8 meeting, they should send their letter to the county’s grand jury, county auditor controller, district attorney or attorney general.