For The Record VIII

Who Wrote This?: I was doing more drive by on the city’s 310 page draft 2003 CAFR (the “Comprehensive Annual Financial Report“), and had a couple more thoughts: Who wrote this thing – like a list of names would be good? Who is (are?) the “CAFR Team?” Who has the answers to questions on this thing? Where are the “infrastructure deficits” (deferred maintenance) numbers and the city’s forecasts for paying these amounts? From the standpoint of the CFO or (?) how is the state of our financial health? Have we “turned the corner” on our financial messes?

Madaffer Wants the Numbers: Kinda hard to argue with Jim on that. So, a couple a weeks ago, this blog raised a concern that the Mayor’s proposed request for a Council “vouch” on the draft 2003 CAFR sounded like a bad idea for the Council. Won’t go over that. On Friday, Councilmember Jim Madaffer issued a memo suggesting that he would not be willing to do the “wish upon a star” thing unless he gets a chance to actually verify the universe of numbers for himself. Aside from the politics of this, it is the only rational thinking on the subject of numbers I have seen since Frye’s “no” vote on MP-II. Madaffer says he is OK to “vouch” for the CAFR if he can get testimony from all the people that actually put the numbers together. Think back over the past couple of years. Sometimes your intuition will tell you that “no” is where you need to be.

If You Lose Your “I,” You’re Just Another “BA”: The most troubling event on the “vouch” thing, is the MEMO of the 13th from Andrea Tevlin, the city’s new “Independent Budget Analyst” supporting the mayor’s request that the council “vouch“. This is a strange one. It looks like “politics” might be involved here (I know you’re shocked). Frankly, the IBA doesn’t belong making a “recommendation” here in the first place. The IBA says that the council review of this “highly technical draft document” is “highly unusual” and nobody would do this in the private sector without knowing a lot more about the numbers. But, she goes on, the Krolls thought it would be a good idea (actually, the Krolls said it should be the “final” of these reports, not the working drafts – just a technicality) so she recommends the Council go ahead and “vouch” for these numbers which they clearly know absolutely nothing about. She advises in her transmittal to the Council that the draft is “substantially complete” but later says she can “provide no assurance” that the numbers are actually complete. But, “vouch” anyway. Huh? This IBA report is long on policy advice and way skinny on financial analysis (start with this, “are we solvent?”). It looks like the IBA is trying to be all things to everyone. Budget analysts for other government bodies don’t do this – why do you? A warning: If you succeed, you will be nothing to anybody. We are “full up” with these types. As I read your memo, I was convinced by the history of these exercises outside of San Diego, and the reality of this effort locally, that you would recommend against it. But, that you turned at the end; well, that said it all. We have folks 60 deep to “vouch,” “bounce” and “bark” for what political influence wants. Be what you were hired to be. Analyze the numbers and provide advice on them, as you have not here. That will be plenty, thanks. We will all appreciate those efforts, along with your reluctance to weigh in politically on policy matters where you clearly do not belong.

Step Up, There’s Still Lots of Room: I didn’t see signature lines on the 2003 CAFR for any of the following: The mayor, the Independent Budget Analyst or the sdCERS Board (the draft city CAFR relies on the numbers in the 2003 sdCERS CAFR). If the “buck” is going to stop somewhere on the numbers, well, where exactly will that be?

A Bit Of “Fuzziness” in the Certifications?: Aside from the above political stunts, the draft CAFR does come with a variety of assurances of its accuracy from a variety of folks. And, it appears that some deep thinking has gone on in the area of the “what” and “how much” of it. There is a signed October 13th “Certification” of the CFO (Jay Goldstone) and City Auditor (John Torell) of the accuracy of the numbers in the CAFR. It contains the following words:

…the draft CAFR does not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.

Huh? Let’s try the draft CAFR’s unsigned introductory transmittal letter to the council from CFO Goldstone, CEO Ronne Froman, and Auditor Torell dated October 16, 2006, which contains the following:

Our objective is to provide you with reasonable, rather than absolute, assurance that the statements are free of any material misstatements.”

I guess that’s “reasonable.” Finally, let’s look at the mayor’s memorandum to the council of October 2, 2006, transmitting the draft 2003 CAFR:

…KPMG, the City’s independent external Audit firm has not completed field work. Therefore I provide no assurance that additional changes, some of which may be material in nature, will not be required …

Maybe these numbers are not yet ready for prime time.

I’d Like to Increase My Commissions: The ink is barely dry on the printing of the San Diego/Miramar International Airport proposition (Marines need not apply) which goes to the voters in November, and “political influence” is inserting itself into the future of the Airport Authority (see, it wasn’t political before) . Seems, D-State Sen. Chris Kehoe, from here, and R-Uber-Assmblyman George Plescia, from here, are concerned that the 3 year old organization could use “more accountability.” Meaning, that it does not fit into the elected office hierarchy of government structures, and the electeds’ might want a bit more authority to keep this thing from doing stuff that could ruin an elected person’s sleep. Well, they are quite right about that element. But, that was the point, I think, when then D-Uber-State Sen. Steve Peace came up with the animal. The whole point of the Airport Commission was to have appointed commissioners who could site an airport without having to worry about re-election, specifically because elected persons can never do it. Why? Because, in the words of Elmer Fudd, it’s (politically) “vewy, vewy”expensive. You offend someone if you site an airport (anywhere) near where people live, and the reality of this region is that electeds will not offend anyone (much less lots of folks) just to achieve an important public goal – which airports are. (Didn’t we do a little “Cargo airport” at Brown Field some years back? I guess that would be a “no.”) But, it is suggested, since this commission somehow failed in its mission to successfully identify a completely “popular” airport site, maybe that process should return to the normal “political” structure. Cycle back with me; the commission was created in the first place specifically to avoid the regular political structures which have historically precluded the siting of any airports in this region. I don’t support the “let’s steal Miramar from the Marines” program (it belongs in Imperial County if you want a 200 year facility), but there’s an all too predictable cycle to this exercise.

Contributing is Good for the Soul: voiceofsandiego.org has been on a tear of late on the County Pension System hedge fund losses (which, in the Amaranth case, will be in excess of one hundred million dollars); and, supervisor discretionary contributions to organizations that then coincidently sponsor travel for their benefactor supervisors. The county’s hedge fund money is gone, and “no big deal” according to the County Pension Fund staff. So let’s talk about the trips. Seems each supervisor has $2 million annually to put into community stuff without going through the regular budgeting process. It’s a “perk” of the office and gives the supes the ability to respond to “smaller amount” needs quickly. Not offensive in concept. Well, it seems that Ron Roberts gave some dough to the World Trade Organization and Pam Slater-Price gave some to the “Mainly Mozart” organization. I like “world trade”, and, just about everything “Mozart.” So far, so good. But now these orgs are including their supe-sponsors on trips to China (for Roberts) and Vienna (for Slater-Price). Problem is, this stuff comes out and folks look for a quid-pro-quo thing. And, for a separate community thing Ron Roberts supported, they “shrunk wrapped” a bus with a cool community theme which included a prominent “thank you Ron Roberts” which was totally dumb. OK. So, I’m listening to Tony Perry of the LA Times on KPBS’ “Editor’s Round Table” on Friday, and he says that we are too provincial here in San Diego-berg and we are always better off when our electeds get out of here and see how the rest of the world works.

I like Tony, but agree with him on not very much. But this time, his point was, the people running this place need to get out of here and periodically bring some new stuff back with them. And, I agree. The gene-idea pool here is way too skinny. If these supes bring something real back that makes this place better, I don’t care that these orgs wanted them to go. Just, make it happen – no excuses. Show us the bacon and tell us exactly what you brought home. Might be good to identify where all this discretionary dough got spent over the last, say, four years. And, it might be good to let folks know how to ask for it in the future. Just a suggestion. On the other hand, the loss of a hundred million tax dollars on a hedge fund flyer, that’s way wrong.

Good Charger News, Finally: Even with the fizzle of the city-county joint effort, the news of late on this topic is noticeably better. That’s because the Chargers are finally meeting with cities that really want them and are financially able and willing to do the work to make it happen (neither of which applies to San Diego). The port assist to the National City effort is just more “positive” energy on the project from a solvent entity. And, we can stop focusing on the persons we hope to blame for it not happening in San Diego (p.s. we’re broke). So, go get it done.

Did We ‘Exchange” The Settlements?: What happened to the SEC settlement? Are we there yet?

–PAT SHEA