Kroll Report

The Kroll report’s initial purpose was to assist KMPG in getting out our audited financial statements – it is these financial statements on which our city’s future, and far more depends.

Yet the Kroll report has taken on a life of its own with today’s dueling responses, scheduled to appear at a special meeting of the City Council.

The mayor will propose today a “rubber stamp” of the Kroll report – this seems on its face; misconceived. Clearly it’s unlikely that Kroll got it right on all 121 of its suggested actions … and more to the point, it would have been nice to have had feedback from the public before embarking on a remedial program.

A management theory reminds us that “people will support what they feel they had a part in deciding” and the people’s support will be key in many of these difficult, painful and expensive proposed changes.

The city attorney has recommended that he be given greater control of the city – but his proposals run counter to the separation of powers that I think most citizens desire, and there is that gnawing concern with conflict of interest. After all, at some point he is expected to defend the city – and it would seem his desire to be monitor, thus controlling the city, and attorney for the city, thus representing the city, would conflict.

His desire to be appointed attorney for the pension board simply is a nonstarter. First, the pension board has a right to select its own attorney. This is a logical and legal right.

After all, none of us would like to arrive in court and learn the other side (or anyone else) had selected our attorney for us, and for this reason and others, the state constitution gives the pension board the right to select its own attorney.

The City Council’s analyst has also proposed some changes to the Kroll recommendations, mostly giving the council more say over appointments.

The best we can hope for today is an open discussion amongst the three “proposing” parties. Hopefully, the mayor will not dig his heels in and cover his ears and see any compromise as a sign of weakness and thus unacceptable. Hopefully, the city attorney will see many of his proposals are not good and hopefully, the council will realize that the mayor should be part of the selection process for the new positions.

My personal, biggest concern is in an area that seems to have created little controversy: the upgrading of the city data processing capabilities. I believe all parties agree this is needed, as do I, but I worry the price tag of $30 million-plus could prove to be much lower than the final bill.

And I would feel more comfortable if the mayor explained how he will select the best and brightest in the data processing world, from both the private and public sectors, to supervise this upgrade.

I also fail to see a need for the city to go to the expense to have its own pension plan actuary. Clearly, there has been much wrong in the way the plan’s funding has been handled in the past – but the pension board is “under new management.” It is the pension board’s responsibility to set the actuarial schedule and thus the city’s annual contribution. Nothing says the city can’t pay more than this amount.

So, what we have is similar to a credit card bill which requests a minimum payment of a certain amount – you can pay this amount, or more – but I doubt any of us would see it logical to hire a CPA to determine if the credit card company had set the correct minimum payment.

And I believe that the new audit committee should select the city’s auditor, and this auditor should report to the audit committee and no one else.

More on Kroll in my discussions of the pension board (SDCERs).


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