An apology, but no resignation

Mayor admits council erred on finances

Administrative Services Director Chris Constantin is overseeing new “fraud, waste and abuse” policies and a hotline for reporting them.

Administrative Services Director Chris Constantin is overseeing new “fraud, waste and abuse” policies and a hotline for reporting them.


“I apologize for the condition the city is in.” Those words, from Mayor Scott Gruendl, were music to the ears of a number of people in attendance at the regular Chico City Council meeting Tuesday (March 25). The council had just accepted a damning audit report for the 2012-13 fiscal year, and several of the usual council scolds—Stephanie Taber, Sue Hubbard, Michael Reilley and John Salyer, among others—had called for someone to be held accountable for the massive fund deficits the audit had uncovered.

“Why haven’t past mayors or [Finance Committee] members resigned because of this scandal?” Salyer asked.

“You should have been skeptical,” Hubbard insisted. “You should have looked.”

Gruendl agreed that council members should have been more alert, but he insisted that resigning would be wrong.

“We did let people down,” he said. “There’s absolutely no doubt about that. I’m embarrassed. … I could resign and walk away, but I don’t want to leave this mess for somebody else.”

“It had become clear,” Gruendl explained, “that [under the previous administration] difficult decisions could not be made, because of the allegiances, the alliances, the loyalty, whatever you want to call it….”

To the council’s credit, he said, it made the decision to bring in a new city manager—Brian Nakamura—from the outside to put together a new administrative team and make much-needed changes.

When Gruendl concluded his spontaneous apology, he received a round of applause.

The audit, done by Sacramento-based Vavrinek, Trine, Day and Co., arrived several months late, largely because of disagreements between the auditor and the city over how to handle the several fund deficits—totaling $13.1 million—it uncovered.

The current plan calls for the city’s general fund to absorb the deficits, for the emergency reserve to be used to pay down $5.3 million in fund debts, and for the city to find a way to pay down the remaining $7.7 million general-fund deficit. This will be topic No. 1 during upcoming budget discussions.

The audit also found that the city had not updated its cost-allocation plan since 2001. The city already has moved to fix that situation.

And the audit found eight significant deficiencies in the city’s accounting practices. The city has agreed with the findings and taken steps to rectify the shortcomings.

The unanswered—and perhaps unanswerable—question was this: How was the city’s previous auditor able to give it a clean bill of health year after year, and garner it professional plaudits in the bargain, when the city’s finances were in fact such a mess?

The best answer Administrative Services Director Chris Constantin could give was to say that whenever a city changes auditors, the new crew inevitably finds room for improvement. “I tend to look forward,” he said. “We can tackle all of these problems.”

The council voted unanimously, with Mary Goloff absent, to accept the audit report, which concluded that the city’s finances met federal standards.

In other council news: A proposal to reorganize the Public Works Department ran into resistance from council members for a couple of reasons. One was that, although it would result in $43,000 in annual savings overall, it called for salary hikes of up to 15 percent for certain expanded positions. The other concern was the plan’s elimination of the urban forester position.

Ultimately the council tabled the matter pending a weigh-in on the urban forester from the Bidwell Park and Playground Commission. In a related action, the council sent back a proposal to hire a park services coordinator, asking staff to come up with a lower salary range.

Also, the council approved a new “fraud, waste and abuse” policy and designated Constantin as the city auditor managing it. Constantin, whose job description seems to get longer every day, is setting up a 24/7/365 hotline for people to report fraud, waste and abuse anonymously. Costs will be absorbed internally, though there is a $1,000 annual fee for the services of a hotline network.