ACES: Interim City Manager Responds to Questions Regarding the City Budget, His First Impressions

Statement by Ashland Councilor Shaun Moran
Sept. 7, 2021 City Council Meeting: 
I want to say thank you to Interim City Manager Milliman for the hard work you and Interim Finance Director Alison Chan are doing around the budget. You recently circulated a response to the entire council addressing some questions Councilor Tonya Graham posed to you regarding the city’s finances. I want to take this opportunity to read into the record some of those important points you raised for our community in response to councilor Graham’s letter of August 27th (excerpt of Graham letter shown below in bold).

 This narrative – that the City’s finances needed to be sorted out – is getting stronger. Given that we have had clean audits and received awards for our budgeting at the City of Ashland, it seems to me that these notions around fixing the City’s financial tracking and reporting are misguided, but I would like you to verify that for me. Have you or Ms. Chan found anything amiss so far? 
Mr. Milliman and Ms. Chan who, combined, have over 60 years of city government experience replied that they “have not encountered any malfeasance but we have had a difficult time following the ball”.
“Creating a large Central Services budget and an array of Special Funds with many transfers in and out is a budget approach that we are both uncomfortable with.  It can be confusing, and in our view makes it more difficult to state the actual cost of providing a service.  I can understand how this approach could lead people to believe that there is some sort of shell game going on.”

Mr. Milliman went on to make observations about the widely publicized award that the city received the last 10 years from the Government Finance Officers Association and the positive annual city audit reports.
“You cannot rely on GFOA awards and the annual audits to determine the fiscal soundness of a city or it’s transparency.  Only the most pronounced malfeasance is usually discovered,” he reminded councilors.
“Cities receive the GFOA award for outstanding budgeting by simply submitting a budget document that follows basic GFOA guidelines, together with a $445 awards fee.  Financial Statements are prepared by staff and reviewed by an auditor.  Auditors test the procedures and safeguards within the accounting system.  And they include a disclaimer in their audit report that the financial statements are being presented based upon information provided to them by staff. City auditors look only at financial statements given to them by staff,” he stated. Mr. Milliman told Councilors a California city he had been brought in to clean up had received the GFOA awards four straight years during which time city officials had spirited away millions to their friends and personal accounts.

Mr. Milliman then delivered, in my view, some of the best advice given to any Ashland City Council over the last decade when he responded to Councilor Graham:
“Only your exercise of your fiduciary duties as Councilors, asking probing questions of management, demanding adherence to high ethical standards and selecting well-qualified managers can assure the public that the city’s fiscal ship is in order.  The more you know about the City’s fiscal condition…in a way that you can articulate it easily and with confidence to the public…the greater confidence the public will have in their local government…and in your leadership.”
Mr. Milliman was reassuring in saying, “Nothing I have seen leads me to believe that anything nefarious is going on here.”  But he also added, “My initial belief is that what is going on is that the level of city services and facilities has been built up over time and is now outstripping the City’s ability to pay.”  
What is clear to me from his message is that things cannot continue as they have. The solutions to our fiscal problems are not going to come from new fees added onto our utility bills or a new tax Ashlanders could pay. We can’t continue to use our public utilities as a piggy bank to subsidize the general fund.
We as a council have some very difficult challenges ahead and hard decisions to make, but I know I speak for the majority of Ashlanders by saying that I am very happy we have Mr. Milliman and Ms. Chan on board to help guide us through this process.  We will benefit greatly from their insight, experience and the fresh perspective they bring.