The Daily Advance: Why Does City Still Need Outside Help With Finances?

Why does city still need outside help with finances?
Julian Eure, The Daily Advance Editor

While City Council’s recent decision to approve the hiring of Durham County’s former chief financial officer to help manage the city’s finances was a good move, it ultimately shouldn’t have been necessary.

Susan Tezai’s hiring as a financial consultant at a cost of $250 an hour — she’ll be paid up to a maximum of $172,000 — may be necessary to ensure city finances continue to stay caught up and that future audits like the one due Oct. 31 get submitted on time. But like state Treasurer Dale Folwell, we question why the city continues to pay for such expensive outside help managing its finances when it already has personnel on the city payroll — City Manager Montre Freeman and city Finance Director Alicia Steward — who are paid by taxpayers to perform this job.

As Staff Writer Paul Nielsen recently reported, the city has already spent close to $500,000 on an outside accounting firm for help completing past-due audits and getting its monthly bank accounts reconciled. The Greg Isley CPA firm was hired at a cost of $100 an hour in October 2021 as part of a corrective action plan the city filed with the state’s Local Government Commission, the state’s financial watchdog agency which is supervised by Folwell’s office. The city had been added to the LGC’s Unit Assistance List in 2020 after failing to file its required annual audits on time.

Isley’s work for the city has paid off. Not only are the city’s bank records now being reconciled monthly, the first past-due audit for 2020-21 was submitted in April and the second, for 2021-22, is supposed to be completed sometime in August. Mayor Kirk Rivers has even claimed the city will submit the city’s 2022-23 audit due in October on time — the first time that’s happened since 2017, he says.

So if that’s the case, why does the city need to hire Tezai?

Rivers claims it’s because the current City Council, which took office 13 months ago, is still “playing catchup” correcting problems it inherited from previous councils, and because it wants to ensure the city is “on solid ground” financially. As explanation for the problems, he continued to cite turnover in the city’s finance director position since 2020 and said Steward has only been finance director for eight months.

While it may be true Steward has been finance director for eight months, she was named interim finance director by Freeman in August 2021 — nearly two years ago — just prior to the end of his first stint as city manager, and she had worked as the city’s assistant finance director before that.

Steward also has received some “enhanced coaching” from the LGC since the city entered an accountability agreement with the agency last October. Writing for the agency at the time, LGC Director Sharon Edmundson said: “An experienced finance officer, who is part of our Coach Team staff, will be available to mentor the Elizabeth City Finance Officer (Alicia Steward) as she works toward creating a foundation upon which both the Finance Officer and the city can build success.”

State Auditor Beth Wood, a member of the LGC board, recently raised doubts about whether that coaching has worked. During the board’s last meeting, she suggested the LGC commence with procedures that could lead to its takeover of Elizabeth City’s finances, indicating that the city’s current finance staff just isn’t up to the task. “People that have been there have said they don’t have a finance officer that can do their job,” Wood said, referring to Elizabeth City. “They have had people come in and try and help, and coach, but (they) just can’t do it.”

Rivers appeared to downplay the expense of hiring Tezai to help manage the city’s finances, noting that funding for her contract is being drawn from monies set aside for the city’s assistant manager position, which has been vacant for two years but still included in the budget.

But of course Tezai isn’t being paid to be an assistant city manager. She’s being paid, essentially, to do the job Steward and Freeman are already paid to do.

Folwell pointed that out in an interview with Nielsen after Tezai’s hiring. “The taxpayers are double or triple paying for these basic services,” he said. “This is not my opinion. Obviously, it is the opinion of the City Council and the mayor. Why would they enter into this contract if they didn’t think that they had problems? … The taxpayers deserve better.”

Indeed they do. How long will city taxpayers have to continue paying for extra help in its finance office? Explanations about “previous councils” and employee turnover only work for so long before they become excuses for failed performance. We’d encourage city voters to remember that when they go to the polls this October.

— The Daily Advance