In response to a WAER report on Thursday, Howie Hawkins, the Green candidate for Syracuse City Auditor, agreed with the Democratic incumbent, Marty Masterpole, that Masterpole's record needs to be set straight.
Below are excerpts from Masterpole's claims in the WAER written and audio reports, followed by Hawkins' responses.
Audit Expectations
Masterpole (WAER written report):
Syracuse City Auditor Marty Masterpole wants to set the record straight on a number of allegations made by his green party opponent in recent weeks. Masterpole is rebutting many of Howie Hawkins' claims, including that he’s not doing enough audits compared to his predecessor.
"My opponent references '11 audits per year and you're doing 4.' I haven't counted 11 unique audits in 2008, 2009, 2010, or 2011. There's no 11 unique audits."
Masterpole says he personally sets his office’s performance indicators; they’re not dictated by the city charter.
Hawkins:
I have consistently referred to expectations for the number of audits to be produced annually in the city budget, not the city charter. See, for example, here and here. In the four budgets since Masterpole took office, the budget approved by Common Council and the Mayor states in the Department of Audit “program responsibilities” section that between 11 and 13 audits were proposed for each of the four years Masterpole has been in office. The budgets on the city's website show the following expectations of the City Auditor:
FY 2012/13: 12 audits (9 financial, 3 special projects)
FY 2013/14: 12 audits (8 financial, 4 special projects)
FY 2014/15: 13 audits (8 financial, 5 special projects)
FY 2015/16: 11 audits (8 financial, 3 special projects)
Four audits have been published on the website of the City Auditors Office in each of those four years.
That same website documents that Masterpole's predecessor, Phil LaTessa, produced an average of about 10 audits per year. The city budgets on the city's website show that expectations for the production of audits and special projects in previous city budgets were much higher under LaTessa's 2005-2011 tenure as well as under his predecessor, Minch Lewis.
In reference to the city charter, I have noted that charter expects monthly audits of the Department of Finance; annual audits of all city departments, the school district, and the housing authority; and an external audit of the auditing department every other year, and that none of these charter requirements are being met. I have stated in community candidate forums that these charter requirements are more than a four-person staff can complete annually, but that they can reasonably be completed over a multi-year plan of work.
Land Bank Audit
Masterpole (WAER written report):
He says there’s a simple explanation for why the number of audits might be down.
"The land bank audit was very extensive, it was time consuming, it was needed to help the land bank which is doing great work helping clean bad properties from our neighborhoods, collect taxes, etc. Had I known at the time the extensiveness of that audit, maybe I would have set that performance indicator backwards."
Hawkins:
The land bank audit was done jointly with the County Comptroller's Office – and it looks like the County Comptroller's office did most of the work if one compares other published audits on the County Comptroller's website and others on the City Auditor's website.
Health Benefits Audit
Masterpole (WAER audio report):
Masterpole cites the 2012 Health Benefits Report as leading to changes that are saving the city up to $3 million a year.
Hawkins:
The Health Benefits Report is a solid audit. However, it was done by hiring an outside contractor, Ken Mokrzycki, a retired veteran of 36 years in various top city jobs.
Much of the savings come from increasing the costs to city employees for their health care, which is just shifting costs to employees.
Significant savings are achieved by taking advantage of a new Medicare Part D prescription plan. Why didn't the audit recommend that the city support a NYS single-payer Medicare for All type of health program?
The New York Health Act, a single-payer bill that passed the NYS Assembly in the last session, would take all the costs of health benefits off of the city's budget, end the cost shifting to city employees, and cover all the residents of Syracuse for all medically necessary services.
Hiring Auditors
Masterpole (WAER audio report):
Masterpole says it is hard to find accountants and auditors willing to live in the city at the salaries the city offers.
Hawkins:
The salaries offered in the city budget for a CPA for Deputy Auditor and for civil service auditors are right in line with the market for these positions, according to a 2012 survey conducted by Robert Half Finance & Accounting, a national financial recruiter.
Audit Priorities
Masterpole (WAER written report):
He also refutes a claim by Hawkins that audits of alcoholic beverage surcharge revenue at Clinton Square festivals are a low priority.
"Before we started monitoring it, it would bring in between $20,000 and $25,000. Now I ask each festival, we want to know how much alcohol you sold, backed up with receipts from the beverage companies. We're up to about $100,000, or up $70,000 a year."
Which translates to about $250,000 over the past four years. Masterpole says he’ll continue those audits because it makes sense to put that money back into parks operations.
Hawkins:
The increase in alcohol revenues claimed in Masterpole's statement here are not documented in his 2013 audit of the Clinton Square Ice Rink. Masterpole's audit makes no reference to the six findings and recommendations of a previous 2005 audit of the Clinton Square and Sunnycrest ice rinks by City Auditor Phil LaTessa, which addressed poor cash handling practices, which created opportunities for fraud, as well as overpayment of state sales tax by the ice rinks. It would have been useful if Masterpole's follow-up audit had discussed what happened with the earlier audit's findings and recommendations.
Masterpole's ice rink audit also notes positively that money was saved by paying temporary Parks and Recreation Department employees the minimum wage instead of the living wage required by a city ordinance of the previous contractor that managed the concession. Masterpole voted against the living wage ordinance in 2001 when he was 2nd District Common Councilor.
In any case, I have argued that with limited resources, the City Auditor should prioritize issues that have the highest impact on Syracuse. Nobody is leaving Syracuse because of the Clinton Square Ice Rink. They are leaving because of struggling schools, failing infrastructure, limited job opportunities, high crime, and concentrated poverty.
The City Auditor needs to focus on the most important questions. A top priority would be improving the timeliness of financial reporting. The fiscal efficiency and integrity of the city impacts every service the city provides and every problem it seeks to address.
The city typically take nine months to prepare its financial statements. It appears that the lack of timely financial reports creates uncertainties that lead the city and school district to run big budget surpluses or deficits. The city ended up with $21.3 million more than budgeted for FY 2011-12 when the financial statements were finally reported by external auditors nine months later in March 2013. As that fiscal year had ended, Mayor Miner was warning that the city would be broke within three years. That same fiscal year, the school district was $81.9 over budget on education expenses for FY 2011-12 (pp. 71-72 of City of Syracuse Basic Financial Statements for FY 2011-12). With the late financial reporting and these kinds of variances, the city or school district could be broke before it realized it.
Two years later, the school district ran a $19.7 million surplus on education expenses for FY 2013-14 (p. 68 of City of Syracuse Basic Financial Statements for FY 2013-14), the last year for which financial reports are available. The city's requests to the state for more school funding and municipal revenue sharing are not credible when the school district and the city are putting money into rainy day accounts.
By comparison, New York City's CheckbookNYC transparency tool tracks the city's budget, revenue, spending, payroll, and contracts, including minority and women's business enterprise contracts, in real time. It is updated daily. I would like to bring that transparency tool to Syracuse. The software for it is open-sourced. But until Syracuse's financial reporting becomes timely, it would be of little value.
These questions and many others deserve audits more than concession sales at the Clinton Square Ice Rink if Syracuse is going to address its most pressing problems.