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Video: Sacramento City Council lambasts Sports Commission after audit reveals mismanagement
by Jared Goyette, published on September 19, 2012 at 8:23 AM
Storyline: City Politics
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The Sacramento City Council had tough words for the Sacramento Sports Commission Tuesday night, taking the organization to task after an audit cited poor management and lack of financial controls as factors in the organization's failure to pay back $400,000 it borrowed from city.
The city loaned the money to the commission to organize for the World Masters Athletics Championships, a track and field competition for athletes over 35 that was held in Sacramento last year.
Steve Cohn was one of the more critical council members. He said that the issue for him was not that the commission couldn't pay the money back, but that they had directly violated the loan agreement by failing to keep the city's funds segregated and only spend the money for its designated purpose – the masters event.
"To ask for a loan, and to agree as part of that loan that the money will not be used for any other purpose, and to find out in the audit it was used for several other purposes does not make me as a council member who is directly responsible to my constituents for tax funds feel at all comfortable," Cohn said. "And I want to underscore the severity of that – that is a very serious situation when we talk about public funds."
A task force comprised of staff from the city, county and the Sacramento Region Sports Education Foundation is working to evaluate structural changes to address the audit's recommendations, and will report back to the council.
Cohn said he thinks the council should consider the SRSEF's report, but also keep all options on the table, including making the Sacramento Convention and Visitors Bureau responsible for sports marking.
Council members Sandy Sheedy, Rob Fong and Kevin McCarty all noted that the many of the events the commission had organized had been successful and had contributed to the city's economy – but they were all also critical, none more than Sheedy, who questioned whether the council should ever give money to the commission again – a troubling suggestion for an organization that receives over half of its budget – $140,000 – from the city.
"I am just really upset about the use of public funds," she said. "We cannot allow this to keep happening, and at some point it needs to stop. The buck stops with us, unfortunately. I would just have a very hard time in giving any more money to this organization – I just needed to say that."
Jared Goyette is the editor of The Sacramento Press
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Even org's actual audit documents are, including the management reports and letters, including the 'going concern' letters issued by auditors, are under law, public documents -- but generally not published... However, as with the FCC's 'public file' requirements of licensees, such documents must be provided upon request to the public...
Further, having worked with a nonprofit that received city funds, the city's contracts require annual audit reporting, and the council had to have received these prior to approving this loan, but chose to ignore them... or perhaps these audits and reports were not included in their council packets, or deliberately concealed by the city treasurer of the time -- remember, Tom Friery served on the org's board...
I have always been 'civilized', but I am not patient with stupidity and cupidity and just plain laziness and mediocrity...
Mayor $116,646
Councilmembers, $60,800 (part-time)
City Manager $258,000
Interim City Attorney $186,643
City Treasurer $165,006
Director of Finance, $150,302
NCAA Championship tournament basketball, gymnastics, volleyball, rowing, they are gone. Olympic Track trials left after 2004. Oscar De La Hoya fought at Arco Arena in 1996. It is doubtful the World Masters event will come back after their experience. Will the Amgen come back? Why have all of these events gone by the wayside? Is it because they were they all managed as poorly as the WMA?
Why didn't the city confirm that the city loan proceeds were held in a segregated account? Where are the quarterly reports to the city from the nonprofit? Did the city ignore the nonprofit's required audit reports, as Viola suggests? Who was in charge of administering this loan on behalf of the city? What did the council know (via reports) and when did they know it? Were there red flags in the nonprofit's financials before the loan was made? And what was Friery doing on the board of the nonprofit if not assuring that it had sound accounting and fiscal controls in place to protect the taxpayers' interests?
Is this city being just as negligent in its oversight of grants and loans it makes to other nonprofit organizations? Is anybody down there really watching the store?
Here's one clue to consider: The city auditor, Jose Oseguera, recommended in February that the council fund a whistleblower hotline that he projected would save in the neighborhood of $6 million per year by reducing waste, fraud and abuse (and perhaps as much as $30 million annually). The council refused to fund the hotline in Feb. The council refused to fund it as part of the budget in June. It STILL hasn't funded it, even though a survery of city employees found 56% of employees have personal knowledge of city waste, fraud and abuse by other city employees, but did not report it. Why didn't they report it? Half of them said that they feared retaliation.
Hundreds of city employees with city credit cards? $10,000 spent at Starbucks? $75,000 on pizza? Five star hotels? Expensive meals at pricey downtown restaurants? Unmonitored credit card use?
Folks, we need to all wake up. Our current city government cannot be trusted to responsibly manage the public's money. For council members to posture and wring their hands after the fact at city council meetings just doesn't cut it. We seen it all before with scandal after scandal. Before we trust them with more tax money, they have to get their fiscal house in order. City government needs a complete financial and management overhaul. It's long past time to take out the trash at city hall.