Archive for December, 2011

The 12/26/11 edition of City Watch included a post by Occupy LA blogger P J Davenport. The writer hit the mark with his question: “LA City Hall: Inept or criminal?”

How can the City Council be upset over an estimated $2 million hit to the cash-deficient general fund when elected officials have failed to approve and manage a truly balanced budget?

Allow me to add – how can any sensible elected body not have seen the potential costs of giving a disorganized, unaccountable movement carte blanche to use and abuse public property for an extended period of time, and coddle them when it became increasingly apparent the cost was going to grow the longer the occupiers stayed?

It might be possible in a parallel Bizarro universe….or in the City of Los Angeles. Where else can one find collusion between corrupt government officials and inane organizers offering only slogans and no solutions?

Mayor Villaraigosa tried to diminish the fiscal impact with his statement that the “First Amendment is messy.”  Let’s not forget that the mayor failed the bar four times, so his knowledge of constitutional law might be messy, too.

The right of free speech did not give the occupy participants the right to deface or damage property any more than it gives any of us the right to graffiti the mayor’s residence. Davenport is as wrong as the mayor in trying to play down the cost of his group’s damage only because the tab is much lower than the overall deficit faced by the city.

$2 million is still a chunk of change.  Who will bear the brunt of the cutbacks the city will have to make to compensate for the cost?

You know the answer, and it will not be our elected officials.

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Spiders face UCLA on Friday

The Richmond Spiders, rebuilding after four senior starters graduated from last year’s Sweet Sixteen team, roll into town on Friday to play UCLA.

I watched the Spiders play last month at the Robins Center at the Richmond campus and twice on television.  My analysis is simple: when they can be brilliant and horrible – all in the same game.

Richmond’s fortunes seems to be tied to those of the team’s only returning starter, Darien Brothers.  When he is hitting his shots, as he did the other night against Old Dominion, the chances are good for a victory.

Other players to watch are 5-8 freshman guard Kendall Anthony and center Darius Garrett, who ranks fifth in the nation in blocking shots. Garrett is a senior, but played behind NBA pick Justin Harper and Dan Geroit the last three seasons. 

Even as a reserve, he made some noise.  He tied an NCAA record with fourteen blocks in one game.

Richmond alumni will enjoy a social prior to the game.

I’ll be there with my family.

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This electric tree at Pentagon Row in Arlington, VA is not only artistic, it also complements the icy sheen from the skating rink behind it. While I favor traditional decorations, the tree is a good fit for its setting.

The plaza at Pentagon Row in Holiday mode

This door in Old Towne Alexandria is both traditional and unique.

An inviting door in Alexandria

 I also liked the shadows the tree limbs cast across the bricks.


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I wish I could recall the name of the person who introduced me to the music of Laura Nyro back in my college days. I soon purchased her album “Eli and the Thirteenth Confession.” The album contained a few of her greatest works….works made famous by bands such as the Fifth Dimension and Three Dog Night, including their hit singles Stoned Soul Picnic, Eli’s Coming and Sweet Blindness.

She died of ovarian cancer in 1997 at the age of 49.

She will be formally inducted into the Rock and Roll Hall of fame in April 2012.

Ironically, her only single as an individual artist that charted was her rearrangement of the Carole King masterpiece “Up on the Roof.”

I had the pleasure of talking with Milt Okun several years ago.  Mr. Okun produced and arranged for some of the top folk groups in the sixties.  Among them, Peter Paul and Mary, The Chad Mitchell Trio (with whom John Denver launched his career) and the Brothers Four.

He also produced some of Ms. Nyro’s music. 

Okun described her to me as a poetess whose work was beautiful but needed editing in order to keep the length to playable proportions.

Perhaps one day, someone will revisit Nyro’s work, find the edited material and weave it into new music.

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The HACLA scandal story is not over, but there is a very important lesson already evident – for the City Controller’s Office.

Controller Wendy Greuel prides herself on her performance audits she claims have identified $100 million in savings for the city.

Identification is not the equivalent of realization.

Given how long it takes for the City Council to sign off on audit recommendations and the length of time to launch follow-up examinations to confirm that changes have been made, no one really knows for sure if estimates have panned out as expected.  You have to take Greuel’s claims with a grain of salt.

For every hour the Controller’s Office devotes to performance audits, that’s one less available to identify the presence of fraud.

There are times when it would make sense to focus on operational efficiency, but one must weigh the estimated benefits of that strategy against rooting out fraud.  Fraud not only has financial implications, but it undermines faith in the government, which could paralyze decision-making and detract from developing sound policies.

In light of long-time allocations of irregularities at HACLA, even years before the revelations of the SoCal Connected story, and in the wake of bribery scandals at Building and Safety, an attempt by the DWP in 2010 to withhold its revenue transfer to the city for $73 million based on misleading information, and gross negligence in collecting fees(which could be viewed as the equivalent of fraud), one would think – one would expect – the City Controller to change audit priorities. 

Any sensible accountant or auditor would consider the culture and competence of any organization when developing internal controls and audit strategies. Greuel is neither an accountant nor an auditor…neither is she sensible. Her approach is simply to follow the check list, deviating from it only when others raise red flags.  Her approach to auditing is what painting by the numbers is to art – stay within the lines and don’t vary from the color key.

Where there is smoke, there’s fire. The controller must make the assumption that the smokey haze over the finances of the city is concealing numerous blazes.

In addition to the SoCal Connected story, Greuel had the benefit of Laura Chick’s suspicions of the agency dating back to her years as controller. Despite this intelligence bonanza, Greuel waited five months after learning of the SoCal Connected story before launching an audit. Instead she whined internally about being stonewalled by the agency and hiding behind the excuse of having no authority.  She did not pressure the mayor – who appointed the HACLA commissioners – and failed to engage the City Council.  Please listen to Warren Olney’s report – it’s a must. Laura Chick was also a guest and was not bashful about criticizing Greuel’s lethargy and the mayor’s hands-off approach.  

Chick unequivocally stated she would have held a news conference on the steps of HACLA had she been rebuffed as Greuel was.

Yea, Laura! She was not afraid to ruffle feathers at City Hall and even took on the mayor for his devious attempts to force Measure B down our throats and mislead the public about using the trash fee hike hire a thousand new police officers.

Greuel would never take a case to the public even if all other measures failed.  There is not an ounce of confrontation in her.  Unfortunately, there are times when auditors must take an adversarial stance. She doesn’t have a centimeter of fortitude and even less accountability to the people of our city.  It’s all about her career and staying on the good side of her political friends.

We will elect a new City Controller in 2013. This race always takes a back seat to the Mayoral and City Attorney contests. What’s more, too many people do not understand the importance of the Controller – the independence of the office and the checks and balances associated with it.

I am glad that City Councilman Zine now has some competition. He will likely travel down the same path as Greuel – it is the only one he knows – and that would be bad news for us.

The presence of Cary Brazeman and Ron Galperin in the race will ensure a debate about the role of the office, how priorities will be set and the approach each will take when confronted with weak or unresponsive management. I will do my best to highlight the issues and pose direct questions, that is if I do not run myself, however unlikely the prospects are given other commitments.

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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 no where.  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 vaneer 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.  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.

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While celebrating my daughter’s birthday with her in Old Towne Alexandria on Sunday, we came across this choral group in front of city hall.

This number represents a Caribbean spin on the season.

Their music put us in the mood for the play we were about to see at the nearby Metro Stage – A Broadway Christmas Carol. The play tells the Dickens classic through cleverly adapted Broadway tunes. It was well worth the ticket price.

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