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City Auditor faces cuts in

Tuesday, July 30, 2002 by

Funding, staff, functions

Plan would cut Auditor's staff by 40 percent

The City Auditor’s Office is facing a cut of almost half its workforce—from 30 employees to 18—under a plan laid out yesterday for the City Council Audit and Finance Committee. City Auditor Steve Morgan, who is losing four employee slots—including two that are currently filled—because of budget reductions throughout General Fund Departments, would give up another eight employees to conduct audits for the city manager’s office.

Mayor Gus Garcia has for years favored creation of an internal audit function within the manager’s office. Yesterday, the Mayor said he had testified against moving the auditor’s office from the City Manager’s control to the City Council when it was proposed for addition to the City Charter in 1991. Since then, the auditor has been hired by the City Council, not the City Manager. Garcia said the city, as an entity with a $2 billion budget and billions more in assets, “should have an internal auditor.” He is a CPA, as is Council Member Betty Dunkerley.

Assistant City Manager John Stevens said the 2003 budget establishes an internal audit function by transferring eight positions from the City Auditor’s Office. Those auditors would probably be placed in the Financial and Administrative Services Department, Stevens said. “What we have put together based on your request is seven auditors and an audit manager,” he told Garcia and Council Members Dunkerley, Jackie Goodman and Will Wynn. “The city has . . . some 10,000 employees who get paid on a bi-weekly basis and we make approximately 113,000 payments annually to vendors.” It would become the internal auditors’ job to perform tests of the city’s internal controls to make sure that those controls are functioning properly and that vendors are being paid on a timely basis, Stevens said.

Dunkerley had a lot to say on the subject. “Auditing and accounting professions are under a lot of pressure right now with the Enron scandal and the big CPA firm scandals where you’ve gotten your consulting and your audit work literally so mixed that you really don’t get a good, fair, honest audit.” She said the same was true, to some extent, with the City Auditor’s Office. “We’ve more and more gone toward the consulting and the surveys and less and less toward the detailed testing of the financial work. So, I’d like to give you three or four ideas . . .” Dunkerley then laid out some guidelines for Morgan to consider.

First, she said, the Auditor’s Office should drop projects of limited scope. “Go ahead up front and determine what your scope is and do that audit from beginning to end.” When Morgan’s office did its limited audit of Austin-Bergstrom International Airport, Dunkerley said, “They did not test whether the management controls were working.” As a result, auditors did not uncover the airport’s failure to remit sales tax revenues to the State of Texas from parking fees—which the city eventually paid, she said. If testing of management controls had been more detailed and complete, Dunkerley added, perhaps the auditors would have found the problem.

Second, she said, Morgan should avoid doing small-scale “assistance and consulting” projects. For example, Council Member Beverly Griffith asked the Auditor’s Office to tell her how much money had been transferred from Austin Energy to the General Fund over a 10-year period. It took the auditors 60 hours to arrive at a figure—and the time was charged to Austin Energy. Dunkerley said she found the answer in about three or four hours.

In another instance, she said Griffith asked how much of an endowment would be needed to generate the equivalent of the cash transfers from AE to the General Fund every year. “Again, that took me five or six hours—just me doing it. Your office billed 179 hours,” she told Morgan. “So there are some efficiencies there where you pick and choose what’s better done by management and have your resources do a more traditional audit kind of thing.”

In addition, she said, Morgan should bring more work plans to the Council subcommittee for guidance. Finally, Dunkerley told Morgan he needs to figure out how long an audit is going to take and what it will cost. “And if you see (that) the timeline deviates by more than 10 percent,” she said, Morgan would need to consult with the Council again.

Morgan said he supports the creation of an internal audit function for the City Manager, but not at a cost to his department. He remarked, “That’s a 40 percent reduction. That will dramatically affect what I’m doing.” The auditor produced a graph showing no growth for his office over the past six years, while the amount of work grew steadily.

Morgan offered to reserve space for “auditing internal control and contract compliance issues at the City Manager’s direction.” He also offered a number of other suggestions that would help the manager’s office but not cut his own staff so drastically. His final idea was a deferral of the initiative to create internal auditing in the City Manager’s office until the economy and the budget improve. In a memo to the Council, Morgan wrote, “Reducing the City Auditor’s resources will reduce its effectiveness.” He said his office is “more independent and more focused on accountability” than would be true of an internal audit group under the City Manager. He noted that his office has been recognized “as a best practice, high performance local government auditing office. We should not move FTEs (full-time equivalents) from an already effective office to a new function which has no track record.” After the meeting, Morgan told In Fact Daily, “My main issue is that I feel like I have a whole lot to do and I feel like my responsibilities are increasing because I’m supposed to be assessing risks and assessing vulnerability in the public safety area in addition to” other audits. “The reason I’m resisting this more than anything is because I don’t think I can take that kind of cut. To me a 40 percent cut in one year is just too much to ask.”

“We always try to figure out what the highest priorities are for the Council,” he said, noting that in the past year his office had worked on “housing, park maintenance and transportation . . . I thought these were important to the Council. Maybe we’re not doing a good enough job of doing what the City Council is interested in . . . I’m reporting directly to the Council and the message I’m getting is I haven’t been doing a good enough job . . . because if I were, they wouldn’t be reducing my FTEs.”

Once unified environmental movement has split over Stratus

About two-dozen environmentalists and Southwest Austin homeowners gathered on the steps of City Hall Monday to call for a public vote on the proposed settlement with Stratus Properties. “We don’t think that a voter-initiated and ratified SOS Ordinance should be set aside or amended without going to the public in referendum,” said John Larkin with the Cherry Creek on Brodie Lane Neighborhood Association.

Under state law, the City Council cannot hold a public referendum on the individual zoning cases. But the Council could hold a referendum on the ordinance adopting the overall settlement agreement. Should the Council pass the item on Thursday, the SOS Alliance would also call for them to include a 90-day delay so they can gather enough signatures to force a city-wide referendum in accordance with provisions outlined in the city charter. That would mostly likely put the item on the May 2003 ballot—which would be a significant delay.

In addition to a public vote or flat-out rejection of the proposed agreement, the SOS Alliance is making several other requests of the Council. In an email circulated to Council members, SOS Alliance Executive Director Bill Bunch asked the Council to approve only the rezoning of the Bear Lake PUD tract while postponing rezoning on the other 14 tracts to allow for the adoption of a regional plan. But Jon Beall, a SOSA board member and president of the Save Barton Creek Association, wrote in an email response that stakeholders originally believed including the Bear Lake PUD with the rest of the property owned by Stratus would be beneficial. “This allowed design flexibility as densities were moved from tract to tract,” Beall wrote. “In February, Bill (Bunch) was adamant and forceful advocating this approach. It is not accurate or fair to now say we will get a better deal if we approve only the Bear Lake PUD.”

Bunch also said that the contributions of the original stakeholders have been misrepresented and the proposed agreement should be supported. That group, Bunch wrote, called for a maximum of 250,000 square feet for both office and retail, and a maximum of 1200 residential units. “It was made clear at the time that it was a bottom line, or end point, rather than a starting point for further compromise and negotiation,” he told Council members. Beall’s response points to the financial bottom line. “The original hopes of the Stakeholder group were . . . Stratus could build about 1,000,000 square feet of commercial and we could buy down to 250,000 square feet for $10 million. Unfortunately, when the numbers came in, Stratus could build double that and still comply with SOS.”

Beall, who has been a calm voice amid the increasingly strident rhetoric surrounding the Stratus proposal, concludes his email to environmentalists and city management with a message of support for the City Council: “The City Staff and Council have devoted a tremendous amount of time to this while at the same time they try to produce a budget under severe financial constraints. They are on our side. Please give them understanding and support as they wrestle with this.”

Friday

Healthcare subcommittee meets today . . . The City Council Healthcare subcommittee will meet at 4pm today at City Hall, with Council Member Betty Dunkerley chairing the meeting. Items on the agenda include presentations on primary care clinics, an update on the Hospital within a Hospital at Brackenridge and development of a “hospital district message to the public”. . . Sounds of the barrio kicks off . . . Council Member Raul Alvarez will help launch the new season of Sonidos del Barrio at 7 pm tonight at Steamboat (Congress at Riverside). The music series, which is co-produced by the Austin Latino Music Association and the Austin Music Network, features various styles of Latino music. Hard-salsa band Willie Santiago & Jazz Puerto Rico will kick off the evening. C’est La Vie, a Latin music powerhouse, will finish off the evening. The music association is a non-profit group that seeks to increase community awareness of the Latino music scene . . . Slusher to interview chief . . . Council Member Daryl Slusher will be talking to Police Chief Stan Knee at 1:30 pm today on his Channel 6 show. Slusher’s assistant Tina Bui will continue as co-host . . . Pipeline Protestors to hold press conference . . . The Safe Pipeline Coalition and supporters will be at the Texas General Land Office at noon today to ask Land Commissioner David Dewhurst to deny easements to Longhorn Pipeline Partners . . . Austin-based candidates asked to fess up . . . After getting all major candidates for statewide office to agree to abide by the Texas Disclosure Pledge, Austin-based Campaigns for People is now taking the challenge to local candidates. The group is asking local candidates for the State Legislature to agree to report the occupation and employer of everyone who contributes more than $500 to their campaigns.

© 2002 In Fact News, Inc. All rights reserved.

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