News of the dismissal of a central Texas interim city manager struck a resounding chord with public and media advocates of accountable local government.
It needs to be clarified that the overriding issues surrounding this story involved much more than simply one appointed city official. A similar one could no doubt be written about a finance director, a county judge, a superintendent of schools, and so forth. It's not about an office or position per se, but it's about factors that make any entity potentially vulnerable to damage due to ineffective financial management and decision-making, and possible attempts to conceal true financial pictures.
There are a few serious lessons that both governing bodies as well as their executive administration teams around the state need to pay close attention to. It is quite plausible that the same situations that developed in this central Texas city are also taking place in other cities, counties and school districts.
It seems that for a period of a few years during economic boom the city's financial status was extremely positive and healthy. Spending was not being closely monitored as to longer term budget, debt and tax impact.
Thus, as the economy began its downward turn, no decisions were made or actions taken by city administration to either place stringent limitations on spending, or to advice the council of a deteriorating financial condition necessitating a strong response to gain control of finances. No measures were activated by this city executive to restrict major projects, programs and department expenditures for several years.
Instead, the interim manager placed the governing body in a tight and undesirable situation by apparently withholding critical information that might have greatly influenced or changed directions, or at least, better informed city legislators of pending trouble ahead.
Elected city officials and public grew increasingly unhappy with the conduct of their interim city manager as it became more obvious that the responsibility for developing a budget was being thrown at city council instead of being a joint partnered mission between city council and administration. What especially caused turmoil were the following neglects by senior city management.
1. Failure to keep city council informed through proper and regular financial reporting
2. Failure to conduct comprehensive audits and to maintain adequate internal control systems
3. Failure to take the lead on budget matters and present council with viable options
4. Failure to advise council of the detrimental effect on reserve and special funds.
Above all, acting in an irresponsible way that left both council and public in the dark about the real financial health of their city. Council found itself chasing a non stopping target while it tried to deal with rising deficits. The interim manager did present the council with a budget filled with accounting errors and included revenue sources that had not even been approved yet. Each of these are not good accounting practices
All segments of the community began to ask and demand to know at what point city leaders were aware of substantial coming budget shortfalls and yet failed to act accordingly. Instead, the city administration pushed council to focus more on raising taxes to bring in more income. Reduction measures took a back seat. Council held their lead manager accountable for not directing that excessive expenditures needed to cease and for not communicating the severity of the approaching and present shortfalls.
These essential management lessons can apply to others in a senior role such as finance director, superintendent of schools, county judge, etc. One can wonder in how many other places similar situations have occurred or are occurring. There must always be full disclosure to the entity's governing body by senior administrative management and there must be effective communication taking place.
Consistent transparency and accountability is the only source for credibility. Without it there is a failure to lead. Every city, county, school district should follow this principle.