Cult of personality
Toolbox
Published: August 27, 2007
The muddled state of Rutland finances is not going to improve unless all involved in the process are doing the very best job they possibly can.
And as long as those most directly involved are in a state of denial, that’s not going to happen. During their election campaigns, both Treasurer Wendy Wilton and Mayor Christopher Louras said they did not think the city’s financial troubles predated the two most recent treasurers, William Shortle and Al Wilkinson.
As documented in Sunday’s Rutland Herald, that’s simply indefensible, given the auditors’ reports.
Without getting into the jargon or the detail of the auditors’ reports, particularly the one prepared by the Vermont State Auditor’s office in 2006, they document that the city lacks basic accounting structures:
n Transactions were not always recorded, or often only one end of a transaction made the books.
n Invoices were missing for expenses.
n Books were not balanced regularly and at year’s end, often did not balance at all.
n The same people collected bills, made the bank deposits and verified the amounts were correct.
n Until 2003, even routine transactions were made manually, and even after that, anything out of the ordinary was not entered via computers. Staff was not trained how to use the software when it finally arrived.
n To date the city still does not comply with the mandatory accounting principles known as GAAP.
There’s more, a lot more, in the auditors’ reports, but you get the idea.
You don’t create a total lack of oversight and control in a year or two. Shortle inherited a broken system when he took the job following the resignation of Ron Graves in 2004, after 34 years.
Undoubtedly, Graves was better at managing the system — he built it, after all — but that doesn’t mean that everything was in order when he left and somehow Shortle completely dismantled it and replaced it with chaos in nine months. The idea is absurd on its face.
Two overlapping problems lie at the heart of the whole fiasco:
First, the city has fragmented its finances. Over time, the city bank account has metastasized into 50-odd accounts. Think what that would mean to your household finances and you get a pretty good idea how the city has run for decades.
Then combine it with sloppy recordkeeping — the second problem — and you’re where the city is.
Say for example that you had separate bank accounts for every household bill, and your rent account was a little ahead but your fuel account was running a little behind when the bills arrived. You’d borrow from the rent account to pay for the fuel, and that’s just what the city has done, over and over, for decades. You can imagine how hard it would be to stay on top of which account owed which one how much.
But with 50 accounts and a multimillion-dollar budget, the recordkeeping has to be impeccable. Handwritten ledgers — sometimes done in pencil — that were not reconciled regularly do not fit the bill. Add in the fact that the money came from different sources — taxes, user fees, federal and state disbursements and grants — and the picture is complete.
Then consider that oversight by various boards of aldermen was lax, and that the Board of Finance consists of the treasurer, the mayor — who writes the budget — and one alderman, so there was no effective oversight for decades. No wonder the system is broken.
It’s not a surprise to find that the city sometimes borrowed from one fiscal year to cover another, even though deficit spending is against state law. Given the circumstances, it would be a miracle if it didn’t happen by accident.
What’s puzzling is why Wilton and Louras don’t want to admit how far back the problem goes. It pre-dates them and the last two treasurers. It pre-dates former mayor John Cassarino and probably his predecessor, Jeffery Wennberg.
It might have to do with old allegiances. It looks like a cult of personality. Ron Graves held one of the most powerful positions in the city forever, give or take, and blaming Shortle and Wilkinson is certainly less risky politically than blaming Graves.
And if you can convince the voters that it’s the person, not the system, that is at fault, then replacing the person is enough to fix the problem.
That’s not to say that Graves intentionally built an inefficient system. Nothing in any of the audits even hints at malice or intentional wrongdoing in any way. But the world was a different place in 1969 than it was when Graves retired, and just the fact that the city did not commit to a computerized accounting system until 2004 — and then only in halting fashion — clearly shows that the Treasurer’s Office did not keep up with the rest of the world during his tenure.
Any solution that stops short of building an all-new accounting system for the city will not suffice. It’s a huge job.
The refusal of Wilton and Louras to recognize the origin of the problem raises doubts as to whether they will succeed at fixing it.
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