LA’s Deteriorating Financial Condition of No Concern to Controller Greuel
- 09 Dec 2011
- Written by Paul Hatfield
PERSPECTIVE - Why do I keep harping on City Controller Wendy Greuel?
It is because she does not understand the responsibilities associated with being the chief financial officer of an organization.
There have been a few news stories in recent days that shed light on her dereliction of duties and lack of competence.
Topping the list is the recent news that the Government Accounting Standards Board is considering significantly more disclosure requirements for state and local government financial reporting.
According to a press release from GASB Chairman Robert Attmore, additional disclosure is necessary “because of significant concerns expressed by users of state and local government financial reports regarding the importance of understanding whether governments are on a financially sustainable path.”
Chief among the concerns of GASB are ever-growing pension obligations.
Mr. Attmore’s statement comes just a few months after GASB proposed more conservative assumptions be used in measuring the unfunded liabilities of state and local public pension plans.
There has also been a national dialog over the impact of unfunded pension liabilities, with public unions and their lackeys in state and local governments adhering to rosy assumptions, and respected academics and research organizations exposing the potential disaster public pension plans pose for the taxpayers.
The truth is probably somewhere in the middle of these opposing views, but still significant enough to cause municipal bankruptcies, or a severe curtailment of core services to residents – maybe both.
Nationally, unfunded pension liabilities estimates range from $452 billion to $2.8 trillion; for the City of Los Angeles, between $1.6 billion to $4.5 billion.
And it’s all off the books: out of sight and out of mind to our elected officials, but one in particular – Controller Wendy Greuel - should elevate the potential danger to the financial health of the city. Yet, she has scarcely uttered word “pension”, if at all, and certainly not in the context of unfunded liabilities.
Financial executives at Enron received prison sentences for failure to disclose the company’s off-balance sheet activities that brought the energy giant down and ruined the lives of many of its employees and customers.
By contrast, Greuel gets to run for mayor.
Where are her priorities?
Most of her audits go nowhere. She seems more concerned about whether departments take inventory of their paper clips as opposed to implementing prompt action when the stakes are high.
Former City Controller Laura Chick just recently criticized Greuel for sitting on detailed media reports concerning the excesses of the Housing Authority of the City of Los Angeles (HACLA) for eight months.
Greuel’s announcement of an audit was not just a day late and a dollar short, but she only suggested a broader audit, one that could uncover even more damage if performed promptly. Instead, there is a veneer of indignation and no sense of prioritization on her part.
The presence of widespread fraud must be a priority. CFOs and controllers in the real world get fired when they ignore even the potential prospect of financial malfeasance.
Nope, we can’t fire Greuel. But we can derail her career as a city official by supporting any of several other candidates running for mayor.
The city’s dire budget situation should be an ongoing concern to Greuel, yet she did not warn the public about the current year’s deficit that has grown to $72 million. [link] She does maintain the city’s check book and one would think a potential threat to cash flow would have spurred her to raise awareness of the adverse trend.
While the City Controller is not responsible for approving the budget, monitoring actual performance against it is clearly within the scope of the office. David Zahniser of the Times appears to have greater awareness of our financial state of affairs.
When the residents of Los Angeles must rely on the media as their primary source for important developments on the budget, fraudulent activity and cash flows, clearly something is amiss.
(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village. He blogs at Village to Village, contributes to CityWatch and can be reached at: email@example.com ) –cw
Tags: Controller, LA City Controller, Wendy Greuel, Mayor, Los Angeles, GASB, Laura Chick
Vol 9 Issue 98
Pub: Dec 9, 2011