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Key Glendale staffers OK'd improper fund shifting

By Sonu Munshi The Republic | azcentral.com Sat Dec 15, 2012 9:32 PM

Top Glendale administrators, including interim City Manager Horatio Skeete, signed off on improper transfers from a city fund to help make ends meet, according to more than three years of records reviewed by The Arizona Republic.

An internal audit this past summer turned up the wrongdoing and showed that the Glendale City Council and an oversight board often were kept in the dark or told about transfers after the fact, and with few details.

In all, $6 million in transfers over the past three years will impact a tight Glendale budget as city officials must repay at least part of the improperly tapped funds.

The records, which include internal e-mails, provide insight on who was involved in the transfers. None of the e-mails about the transfers included now-retired City Manager Ed Beasley, but Skeete recently told the council final decisions always rested with Beasley.

The paper trail shows that Skeete, who as a deputy and assistant city manager oversaw the departments involved in the transfers, was kept apprised of the moving money and gave his nod to some of the transfers. The city’s budget, finance and human resources heads were all in the loop.

Some council members say the transfers reflect past efforts to conceal the money problems Glendale faced.

Skeete, who is expected to seek the city’s top post permanently, may now face a tougher road when a search gets under way in the new year.

“He was overseeing these departments for the last few years — it was ultimately Horatio’s responsibility,” Councilwoman Yvonne Knaack said. “All of this will be taken into consideration when we do look for a city manager.”

The transfers violated city ordinance and a state law that limits what can be paid for with money from trust funds for liability claims, the audit showed.

At least one e-mail from 2009 showed Glendale’s former risk manager talking about how to get around the state law.

The improper transfers went to three areas: to partially pay a penalty the city owed the state retirement system after an early buyout to city employees, to bolster another fund that had gotten too low and to pay some salaries.

The Risk Management Trust Fund dropped from about $8million in July 2010 to less than $3million this June.

Budget Director Sherry Schurhammer said she and Skeete had recommended providing the council with at least an estimate of the early-retirement penalty, but Beasley chose not to include it in his 2009-10 budget. Beasley could not be reached for comment.

“We should have been more transparent about it,” Schurhammer told the council earlier this month.

It was midway through the next budget year, in February 2011, that the council was asked to vote on a series of 2009-10 budget amendments, including the transfer to pay the early-retirement penalty, according to meeting minutes and the audit.

At the time, Skeete told the council the early-retirement penalty hadn’t appeared in the budget because the amount was unknown, the minutes show. Like Schurhammer, Skeete now says that he, Beasley and other top managers did have some estimates.

The city auditor who reviewed the Risk Management Trust Fund this spring had raised concerns that Skeete was making it difficult to conduct the audit. She also was concerned about his suggestion to change her title, saying it could undermine her independence.

“I am also greatly concerned about being able to access records, conduct audits and report findings independently and objectively to the assistant city manager without fear of reprisal,” the auditor wrote in an e-mail to Beasley in May.

Skeete told The Republic he had balked at the audit because of the timing, as the department was in the midst of finalizing the city budget and trust-fund balance studies. Skeete said he asked the auditor to contact the department later, when they could more feasibly help facilitate it.

Overall, Skeete said there was no intent to hide anything, as the city’s longtime practice often was to seek council approval on transfers, which is required, after they had occurred.

He acknowledged that the council was not informed enough about the transfers.

Asked whether he ever questioned or knew that the transfers were improper, Skeete said he relied on the risk manager and the HR head’s recommendation. “It probably should have been discussed more,” Skeete said.

Some council members say that the audit has taught the city to operate more openly but that there’s no point in rehashing the past or pointing fingers. [And of course no point in firing the city employees that committed the crimes]

Mayor Elaine Scruggs said she wants accountability after a thorough external review. She had suggested the County Attorney’s Office review the matter, but she said a council majority chose not to pursue that. [If she isn't going to pursue the issue Mayor Scruggs doesn't want accountability!!!]

Scruggs said in any organization, the chief executive is ultimately responsible. But she said there are many employees whose actions appear to have been contrary to law or, at the least, “good financial operations.” [Well Mayor are you going to call the Glendale cops and put these crooked Glendale employees in jail??? OK, probably not! You're going to help them cover up their crimes???]

The mayor questioned why the city attorney or other top managers didn’t speak up. City Attorney Craig Tindall, who had raised concerns to the council about some other transfers earlier this year, told the mayor he does not have the duty or resources to look at the propriety of such financial decisions. Tindall said he would have stepped in had he known for certain there was a legal problem.

The mayor and some others say Skeete, as the interim city manager, has ushered in greater openness on city finances. That includes staff at last week’s council meeting acknowledging they’ve known since 2010 that a handful of other positions were paid from a water-and-sewer fund instead of the proper fund.

The council last Tuesday agreed that the positions would revert to the General Fund and that the utility fund would be repaid. [yea, sure!!!!]