Past CFOs say Atlanta lacks accountability, financial controls

Atlanta council members open a retreat today focused on financial matters as the city tries to adjust to a worsening recession, the city’s own financial crisis and a Finance Department that consultants say is in ruins.

City officials expect to spend the majority of their time today and Friday working through the city’s eroding financial position and ideas to shape the 2010 budget. The city’s 2008 audit, released this week, showed Atlanta ended fiscal 2008 with a $71 million deficit.

“If you ask people what the No. 1 issue in the city is today, they will tell you public safety,” said Council President Lisa Borders. “If you ask me, I’d tell you finance. If you don’t get your numbers right, nothing’s right.”

The council heads into the critical session knowing the Finance Department won’t be much help in steering Atlanta out of a crisis that’s seen a series of back-breaking cuts to departments and plummeting morale in the past year.

Deloitte Consulting’s experts told the council last week the department is in disarray. Their damning report noted the department was unable to properly operate its new computer system, couldn’t properly support other departments, gave the city virtually no long-term financial guidance and operated in constant crisis mode.

The report sent council members reeling since most had voted for two previous attempts to reorganize the department since Shirley Franklin became mayor seven years ago.

Rick Anderson, Atlanta’s first chief financial officer under Franklin, pushed through council a major reorganization during her first term as mayor.

The effort redrew all the positions and required staff to reapply for new jobs with higher standards. Those that couldn’t meet them went elsewhere or were let go.

Anderson, who spent about two years in the job before retiring, readily admits his overhaul flopped and he’s not hopeful any reform effort will work.

“Trying to improve the capabilities of Finance Dept. staff is a very tough nut to crack,” Anderson said in an e-mail. “The fact is the city is not an attractive place to work for finance professionals, from CFO down to entry-level accountants and analysts. Leadership starts at the top, and I don’t see how the city can attract a good CFO in the foreseeable future. I’m just pessimistic about the city being able to even interest the right people in the job.”

Janice Davis also pushed other reforms during her three-plus years. She left the city for a job in Texas last year as Atlanta was in the throes of dealing with declining revenues and a deficit caused by budgeting mistakes.

During a conversation with the City Council last year, Davis famously graded her department’s internal controls and operations an F during a moment of surprising candor.

Still, she says calling the department broken goes too far. Davis believes the department made progress during her time.

“The challenge is … in the authority the department has to direct the operations and accountability of the departments,” Davis said in an e-mail. “The systems have not been in place to monitor what the departments do and the departments have not been held accountable for their actions. The dual report [the CFO has equal responsibility to the mayor and council] tends to exacerbate the situation in that the CFO has little authority to impose any controls on the departments.”

Whatever happens likely will be up to the next mayor and council. Elections for both are set for this fall. And whoever wins the mayor’s post will want their own finance person anyway.

Until then, the department will continue to operate a stop-gap system with Jim Glass, a retired corporate executive, steering the city’s financial ship under contract until Franklin’s term expires at year’s end. He’s expected to spend much of today briefing council on what he found during his first 100 days.

Reforms then must be built on continuity and stability, said Councilman Howard Shook, who chairs the council’s finance committee. He stressed the department has been gutted by budget cuts and departures. Shook also noted there have been five different CFOs during the past five years.

“Let’s not change CFOs every month with an R in it,” Shook said. “So somebody actually remembers what it is we are trying to accomplish. We’ve got to get a good person and stick with them.”

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ATLANTA 2008 AUDIT RESULTS

A tough fiscal 2008 for Atlanta actually went better than city officials originally expected as revenues came in higher and expenses were lower than feared. The net result: a year that ended nearly $71 million in the red.