Zero to Hero: A Tale of Misinformation and Bad Management in Local Government

 

California's State Auditor has a "High Risk" program that catalogues cities which are considered high risk for financial reasons. By the standards set by the State Auditor, Artesia would very likely be considered 'high risk', but the City seems to be off the State of California's radar for a very strange reason: no data.

According to the California State Auditor, cities are considered 'high risk' if their financial reports suggest that a City is having problems paying bills, has a low general reserve, or has some other financial issue that affects the lawful operation of a City.  The data gathered in this High Risk Program are received from financial reports submitted by cities every year, in accordance with Generally Accepted Accounting Principles (GAAP).

But, what happens if a City doesn't submit an annual report, and hasn't done so in years?  The last time the City of Artesia submitted an annual financial report was for fiscal year 2016-2017.  In that fiscal year, Artesia had a perfect ranking, scoring 30 out of 30, and even received a "Low Risk" rating.  Its general reserves were healthy, despite previous claims during that year that Artesia had zero reserve or next to nothing.

That was the last fiscal year that an annual financial report was published.  According to the the Auditor, certain cities are exempt from having to publish them, and those that did not were excluded from the reporting. Since Artesia did not publish any financial reports, it is not listed in the 'high risk' area.  However, it should be noted that not submitting financial reports is very rare. Artesia is among the 2.5 percent of cities that have not submitted financial reports.

Zero to Hero Since 2013

When City Manager Bill Rawlings was first hired in 2013, the City was running smoothly for several years afterwards, financially speaking.  Much of that smooth operation was largely due to a previous Deputy City Manager named Justine Menzel. She oversaw the City's finances and made sure that it complied with GAAP.  She had done so for many years prior to Rawlings. It was under her watchful eye that the City won its final award for fiscal soundness and responsible budgeting in 2014. For two years afterwards, Justine still oversaw the audits and published Comprehensive Annual Financial Reports, though the budget was primarily handled by Rawlings. The last financial report published by the City was hers, which she created before retiring in 2016.

Since his hiring, Rawlings often proclaimed that the City had next to zero in its reserves. This was something he would repeat for several years.  He even got the City Council to repeat the mantra. In 2016, for example, former Mayor Victor Manalo was repeating Rawlings’ talking point that Artesia was in a dire financial emergency, and in his State of the City address Manalo talked about it and even said Bill Rawlings’ financial ingenuity was turning the tide. Take note of this - Manalo also said that the City had at the time $4.1 million in its reserves.

This claim that there were no reserves is puzzling, as Artesia had been saving money after the previous recession in 2008 (popularly known as The Great Recession), when the City had to lay off many of its employees. 

Artesia’s previous City Manager Maria Dadian passed a budget in 2012 with $3 million in reserves.  It took three to four years to build up $3 million.  Dadian retired shortly afterwards.

In 2013, an Interim City Manager named Don Powell came on board and also presented a budget that included $3 million in reserve. 

So, this talking point about the City having no reserve, started by Rawlings, was basically a form of ‘resume building,’ as a former employee stated. Even though there was a healthy and growing $3 million reserve, (almost one third of the City’s budget), Rawlings painted a picture of a City with no reserve, and how he almost single handedly saved the City from financial ruin.  As one former employee put it, “He went from zero to hero."

This was the story he projected to the City Council, while employees in the know scratched their heads in confusion.

Today, five years after Manalo said that the City had $4.1 million in reserves, the City Manager is now claiming the City has $16 million in reserves.  That means two things - either A) the City has been putting $2 million in reserves away every year, including one year where the entire world was shut down, or B) there's something really fishy going on.  Being that the City has not published an annual financial report in years, Eye on Pioneer is leaning towards 'fishy'.

A Purge Against Artesia's 'Old Guard'

In 2015, Rawlings made a fateful error. He hired a consultant named Tracy Fuller, a former City Manager of Mammoth, California with a shady past. Fuller was given the title of Administrative Services Director. Fuller effectively replaced Menzel as second in charge, and took over much of the administrative role of the City Manager, and even took much of Menzel's duties in Finance. 

Fuller, however, wasn't a very charismatic person.  She often angered people with rude comments. Her repeated conduct even led the union to file a letter about her, first to the City Manager and again to the City Council. These union actions may have been the catalyst for Rawlings next strategy, which employees summarized as 'getting rid of the old guard'.

With Fuller as his enforcer, Rawlings made moves to create a workforce that was either blindly loyal to him, or heavily reliant upon him, while eliminating as many long time managers as possible. Rawlings replaced these directors and managers with inexperienced or even unqualified personnel in the highest offices (i.e. department heads). Menzel mysteriously retired in 2016.

Consider:

1. Former Deputy City Manager/Finance Officer - Retired

2. Public Works Director - Resigned

3. Administrative Manager - Retired

4. Community Development Director - Reassigned as a Code Enforcement Manager

5. City Clerk - Retired

All of those resignations and changes in duty happened between 2016 to 2018.

Rawlings then began installing managers who had no related degree and little experience in their various fields. Several Finance related managers came in who actually had degrees and experience, but those individuals were not given any responsibility and they soon left for more coherent pastures.

And that was just management. Among the rank-and-file employees, the Public Works Department has shrunk, with no plan in place to replace employees who have left. Other employees who were considered part of the 'old guard' were branded as disgruntled, stripped of duties, and then had those duties divided up and doled out to newly hired employees.

This month the City Manager should be getting his review. He has often received great reviews from most of the City Council, even during years where employees pleaded to the Council about what's happening behind the scenes, and even during years when no budget reporting or annual reports were published. How does he keep getting passing evaluations? Simple: He controls a simple majority of the City Council, and he dictates how he is evaluated.  

But now, with all these misgivings coming to light and with managers now in the process of unionizing because of the repressive work environment, all employees are watching the City Council. Will they show leadership, or will those three bend the knee to Rawlings yet again?