In response to the following insider tip alleging fraud in overtime compensation in the fire department, with corresponding but less detailed information provided involving alleged similar abuse in the parks and police departments, and a recommendation from an individual with extensive law enforcement and white collar criminal investigation experience, further forensic accounting and fraud detection analysis was performed on the city’s 2008 and 2009 overtime compensation information provided in an Open Records Request in conjunction with the original blog on this matter entitled “Over-the-Top Overtime Compensation – Is There a Draft in Here” as detailed below:
— Forwarded Message —
From: COR Employee currentemployee@cor.gov
To: editor@cornews.net
Sent: Friday, August 21, 2009 2:59:39 PM
Subject: cornews: Car Allowances
This is an enquiry e-mail via http://www.cornews,net/from: COR Employee currentemployee@cor.gov
If you opted to make an open recrods request for the car allowance rules and mileage rules in the COR human resources policies and procedures you would see what King Keffler was doing is against his own rules (ie. using a city vehicle if you get a car allowance).The only time you can do this is if your car is broke or not large enough for the job. In addition, the on duty shift commanders for the fire department have a personal driver, a city Fire Department decaled SUV, and all three get a $492 car allowance. The Fire Chief often takes the fire department cars (Admin 1 or 2) for his own use while he get a personal car allowance as well. This city is so corrupt that I am disgusted to work here. If you really want to see corruption, request the overtime records of the fire department. Over 1 million in overtime for the FD alone.
Benford’s Law Principle:
http://en.wikipedia.org/wiki/Benfords_law
Benford’s Law, also called the first-digit law, states that in lists of numbers from many (but not all) real-life sources of data, the leading digit is distributed in a specific, non-uniform way. According to this law, the first digit of 1 occurs almost one third of the time, and larger digits occur as the leading digit with lower and lower frequency, to the point where 9 as a first digit occurs less than one time in twenty.
As shown on the chart below depicting the Benford’s Law probability distribution, along with the derived mathematical formula, with the y-axis representing the probability of occurrence from the smallest (low) to largest (high) and the x-axis representing single digit or combinations of numbers from smallest (left) to highest (right), the Benford’s Law distribution of numbers is a gradually sloping downward curve that allows one to reasonably predict based upon statistical probabilities how often such randomly occurring single digit, or combinations of digits, would normally occur in a valid sample of data:
In essence, the Benford’s Law principle of statistical probabilities is based upon the inherent random frequency/occurrence of numbers and combinations thereof. The lower the number, the higher the probability of that number occurring in a statistically valid sample of data. Lower numbers such as one (1) or two (2) for first or second digits will occur more often on a random basis than the numbers seven (7) or eight (8). Similarly, combinations of lower numbers, such as the combination of 12 consisting of the first digit of 1 and the second digit of 2 will occur more frequently than combinations of higher numbers, such as the combination of six (6) and seven (7) or combination of 67.
Benford’s Law has been found to apply to a wide variety of data sets, including electricity bills, street addresses, stock prices, population numbers, death rates, lengths of rivers, physical and mathematical constants, processes described by power laws, voting/election fraud, and most importantly, forensic accounting and economics analysis, fraud detection in predictive analysis, and accounting and expenses fraud. Certified fraud examiners use this program or a derivative to detect government or business/corporate fraud. In the U.S., evidence based on Benford's law is legally admissible in criminal cases at the federal, state, and local levels.
Harvard Business School Journal of Accountancy (HBSJA) and AICPA – Fraud Buster Detection Program:
http://www.journalofaccountancy.com/Issues/2003/Aug/TurnExcelIntoAFinancialSleuth.htm
The HBSJA in conjunction with the Association of Independent Certified Public Accountants (AICPA) have put together a simple to use and understand fraud detection Excel spreadsheet entitled “FRAUD BUSTER” based upon Benford’s Law that will allow one to perform forensic accounting and fraud analysis of financial data to determine whether or not there is a high probability of fraud being committed. After entering the data and running the program, if single first or second digit numbers or combinations of first and second digit numbers fall well outside the expected norms or frequency of occurrence, either under (less than expected) or over (more than expected), there is an increased probability that fraud is being committed. The higher the deviation, above or below, the higher the probability of fraud. The Fraud Buster program will detect either outright fraud or attempts to cover up fraud, as both acts will fall outside the normal realm of random occurrence/probability.
Benford’s Law/Fraud Buster Forensic Analysis Results of COR Overtime 2008-2009 Compensation:
Although Benford’s Law has certain limitations and is not effective in detecting fraud for all financial data, such as instances where the data set is too small, where data include built-in minimums and maximum’s, or where data sets included assigned numbers, none of these situations appeared to be applicable involving the COR overtime compensation and hours claimed information provided via an Open Records Request. This information consisted of 2,474 pieces of data consisting of overtime salary paid and hours claimed constituting 2/3 of the total overtime paid by the city over the past 2 years. Furthermore, this data representing overtime paid to 409 city employees in the parks, fire, and police departments represents nearly 40% of the total city current employee base. Thus, it appears that the analysis presented below is based upon a statistically valid sample pending verification and further review by law enforcement officials and statistical experts.
After compiling, sorting, and then segregating the data by department and running various Fraud Buster test scenarios based upon overtime hours claimed, overtime salary paid, and combinations thereof for one or both years to identify and potentially isolate possible areas of abuse, preliminary but fairly conclusive analysis using the Benford’s Law Excel Fraud Buster detection program on the OT data, as detailed below on the various Fraud Buster program graphs depicted for First Digit, Second Digit, and First Two Digit tests in comparison to HBSJA example/sample fraud case graphs, indicates that there is a high probability of significant and widespread fraud being committed. Similar to the HBSJA sample fraud case graphs, statistical deviations above or below the expected norm of 3-5X, as well as highly unusual recurring and nearly identical/level patterns of outlier first and second digit data sets from the lowest to highest pairs, were noted. Further analysis, sampling, and more specific testing scenarios could possibly be run to help further isolate the suspected areas of abuse.
Along with the questionable “plug” figures found in the fire, parks, and police overtime records (matching cents figures for both the gross compensation received and overtime salary paid for certain individuals for two consecutive years) that by themselves violate the Benford’s Law principle, are highly suspicious, and worthy of further investigation, these Benford’s Law Fraud Buster tests further support the anonymous tips provided from insiders in the fire, parks and police departments that fraud and/or theft is being committed. This is further supported by the high amounts of overtime compensation being provided from one year to the next, excessive hours being claimed, and the high levels of recurring overtime being paid from one year to the next as a percentage of total compensation, all of which raise further question.
Summary:
Given that the city council and city manager’s office has been advised of this matter and refuses to launch an investigation into the alleged overtime abuse/fraud and theft, this information is being provided to law enforcement officials at various levels whom should conduct a full and complete audit of all overtime records of these three departments over the past 3-5 years. Whistleblowers and witnesses are encouraged to come forward with additional information, and they may be eligible for a sizeable cash reward being offered. More importantly, it is the right, honest, just, and honorable thing to do.
Sunday, March 21, 2010
Monday, March 8, 2010
Grand Homes In Trouble
GRAND HOMES BUSTED: COMPLAINT FILED BY RICHARDSON RESIDENTS SUCCESSFUL
Law enforcement officials have just confirmed that a HUD/RESPA complaint filed by certain Richardson Residents involving locally-based Grand Texas Homes, Inc. (GRAND) and its captive builder-controlled title company, Grand Title Company, LLC (GTC) involving illegal real estate settlement-related practices was successful. The complaint and ensuing investigation focused on selling, marketing, affiliated business disclosures, required title service provider practices and sales agreement provisions, and related business referral/kick-backs involving federally-related mortgage transactions associated with the Enclave of Breckinridge development in northeast Richardson. As the lead HUD/RESPA investigator in Washington, D.C. remarked when critical additional documents were provided by the two lead complainants, “YOU’VE MADE OUR CASE.”
The following is a summary news release of the case, along with an attached copy of the actual settlement agreement, with the two main violations cited by HUD being: 1) Section 8(a) which prohibits the giving and accepting of any fee, kickback, or thing of value pursuant to an agreement or understanding; and, Section 9(a) of RESPA which prohibits the seller of a property that will be purchased with the assistance of a federally-related mortgage from requiring directly or indirectly, as a condition to selling the property, that the title insurance covering the property be purchased by the buyer from any particular title company.
HUD Settles Alleged Sham ABA Case http://mortgagelawblog.com/?cat=78
The Department of Housing and Urban Development has posted a new settlement on its website, alleging violations of the Real Estate Settlement Procedures Act of 1974. (HUD Settlement Website Link: http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm )
The settlement is between HUD, Grand Texas Home, Inc., its owners and officers, and Grand Title Company.
As its core allegations under the settlement, HUD generally states:
Grand Title did not operate as a bona fide independent title agency,
Grand Homes failed to provide consumers with the required ABA disclosures, and
Grand Homes required consumers to use its affiliate, Grand Title.
The defendants agreed to pay HUD $200,000.
Certain language from the settlement is of particular note. For example, the agreement expressly permits Grand Homes to select the title insurer so long as Grand Homes “pays the title costs.” While this language appears in the pertinent regulatory provisions, certain persons at HUD sometimes argue that payment of the title costs is not sufficient, because the costs generally are backed into the home prices.
The agreement also sets forth a laundry list of items that HUD presumably views as undermining the bona fides of an affiliated title company.
Along with no restitution being made to the victims, the inclusion of a consumer-unfriendly settlement provision allowing GRAND to continue selecting the title insurer if it pays the title policy cost with proper disclosure thereof, which as noted above will most likely be buried into the cost of the home and with the understanding that most buyers fail to read or fully comprehend the negative implications of a builder effectively issuing a title policy on a home and property it has developed, the settlement failed to include or mention Chicago Title Insurance Company (CTIC) which partnered with GTC in this “alleged” sham title operation. CTIC has an extensive enforcement history with HUD and the State of Texas Department of Insurance (TDI), per the attached major settlement where CTIC paid a $5 million fine involving Section 8(a) violations for referral of business in violation of the anti-kickback provisions and Section (4) violations involving inaccurate HUD-1 closing statements and a separate but related $1.2 million fine paid to TDI for improper land flip transactions, inaccurate HUD-1 closing statements and numerous other violations of the Texas Title Manual: https://wwwapps.tdi.state.tx.us/inter/asproot/commish/da/searchdb2005.asp
Real estate in Texas is big business, and these widespread illegal practices may help explain why the State of Texas has the highest average title policy costs in the U.S. per the most recent year-end 2009 statistics at $3,855 vs. the national average of $2,732, a difference of $1,132 or 41.1%: http://www.bankrate.com/finance/mortgages/texas-tops-2009-closing-cost-exclusive.aspx
As the old adage goes, LET THE BUYER BEWARE, and that would especially be the case in choosing what builder and title companies that you deal with in terms of how they transact business and what their prior enforcement action histories are and the amount of title/closing costs you’re being charged vs. the competition. While investigations continue into other related suspected illegal activities, our hats go off to these fellow Richardson Residents in a small but important step in their ongoing efforts to expose corporate fraud and unseat government corruption at all levels.
GrandHomesHUD11-21-08Settlement.pdf
ChicagoTitle2-23-05SettlementAgreement.pdf
Law enforcement officials have just confirmed that a HUD/RESPA complaint filed by certain Richardson Residents involving locally-based Grand Texas Homes, Inc. (GRAND) and its captive builder-controlled title company, Grand Title Company, LLC (GTC) involving illegal real estate settlement-related practices was successful. The complaint and ensuing investigation focused on selling, marketing, affiliated business disclosures, required title service provider practices and sales agreement provisions, and related business referral/kick-backs involving federally-related mortgage transactions associated with the Enclave of Breckinridge development in northeast Richardson. As the lead HUD/RESPA investigator in Washington, D.C. remarked when critical additional documents were provided by the two lead complainants, “YOU’VE MADE OUR CASE.”
The following is a summary news release of the case, along with an attached copy of the actual settlement agreement, with the two main violations cited by HUD being: 1) Section 8(a) which prohibits the giving and accepting of any fee, kickback, or thing of value pursuant to an agreement or understanding; and, Section 9(a) of RESPA which prohibits the seller of a property that will be purchased with the assistance of a federally-related mortgage from requiring directly or indirectly, as a condition to selling the property, that the title insurance covering the property be purchased by the buyer from any particular title company.
HUD Settles Alleged Sham ABA Case http://mortgagelawblog.com/?cat=78
The Department of Housing and Urban Development has posted a new settlement on its website, alleging violations of the Real Estate Settlement Procedures Act of 1974. (HUD Settlement Website Link: http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm )
The settlement is between HUD, Grand Texas Home, Inc., its owners and officers, and Grand Title Company.
As its core allegations under the settlement, HUD generally states:
Grand Title did not operate as a bona fide independent title agency,
Grand Homes failed to provide consumers with the required ABA disclosures, and
Grand Homes required consumers to use its affiliate, Grand Title.
The defendants agreed to pay HUD $200,000.
Certain language from the settlement is of particular note. For example, the agreement expressly permits Grand Homes to select the title insurer so long as Grand Homes “pays the title costs.” While this language appears in the pertinent regulatory provisions, certain persons at HUD sometimes argue that payment of the title costs is not sufficient, because the costs generally are backed into the home prices.
The agreement also sets forth a laundry list of items that HUD presumably views as undermining the bona fides of an affiliated title company.
Along with no restitution being made to the victims, the inclusion of a consumer-unfriendly settlement provision allowing GRAND to continue selecting the title insurer if it pays the title policy cost with proper disclosure thereof, which as noted above will most likely be buried into the cost of the home and with the understanding that most buyers fail to read or fully comprehend the negative implications of a builder effectively issuing a title policy on a home and property it has developed, the settlement failed to include or mention Chicago Title Insurance Company (CTIC) which partnered with GTC in this “alleged” sham title operation. CTIC has an extensive enforcement history with HUD and the State of Texas Department of Insurance (TDI), per the attached major settlement where CTIC paid a $5 million fine involving Section 8(a) violations for referral of business in violation of the anti-kickback provisions and Section (4) violations involving inaccurate HUD-1 closing statements and a separate but related $1.2 million fine paid to TDI for improper land flip transactions, inaccurate HUD-1 closing statements and numerous other violations of the Texas Title Manual: https://wwwapps.tdi.state.tx.us/inter/asproot/commish/da/searchdb2005.asp
Real estate in Texas is big business, and these widespread illegal practices may help explain why the State of Texas has the highest average title policy costs in the U.S. per the most recent year-end 2009 statistics at $3,855 vs. the national average of $2,732, a difference of $1,132 or 41.1%: http://www.bankrate.com/finance/mortgages/texas-tops-2009-closing-cost-exclusive.aspx
As the old adage goes, LET THE BUYER BEWARE, and that would especially be the case in choosing what builder and title companies that you deal with in terms of how they transact business and what their prior enforcement action histories are and the amount of title/closing costs you’re being charged vs. the competition. While investigations continue into other related suspected illegal activities, our hats go off to these fellow Richardson Residents in a small but important step in their ongoing efforts to expose corporate fraud and unseat government corruption at all levels.
GrandHomesHUD11-21-08Settlement.pdf
ChicagoTitle2-23-05SettlementAgreement.pdf
Wednesday, December 16, 2009
Monday's Council meeting - Visitors Section
I watched with interest the visitors section this past Monday. Seven citizens got up to speak about various issues.
http://richardsontx.swagit.com/player.php?refid=12142009-50
1. 00:025 - 04:42 - Dave - It looks like Dave read most of the article he published on his website earlier. This came down to pointing out that the council can consider themselves "Tax and Spend Liberals" for the hiring of Fred Hill as a lobbyist for the City of Richardson. He pointed out the so-called enemies list of the Texas Association of Counties. To name a few, Libertarians, Club for Growth, Freedoms Works, Americans for Tax Reform, National Taxpayers Union, American Legislative Exchange, Sam Adams Alliance and the American Majority. All of these groups seek to make government smaller and more accountable along with lowering taxes.
He stated that the opposite of what these group want is higher taxes, bigger government, more rights for the government at the expense of fewer rights for the tax payers and less transparency.
Fred Hill has been hired as a lobbyist for the Texas Association of Counties. He has been hired to lobby against what the enemies of the Texas Association of Counties want. The city of Richardson pays Fred Hill the second largest fee, $75,000 of taxpayer funds to lobby against the resident of Richardson.
In summary, he called the called the city council's action the actions of "Tax and Spend liberals."
05:10 - 11:34 - Jimmy - He raise some very serious questions about the gold course. He is a very intelligent person who has done his homework. 18 TABC violations including counts of subterfuge. These are not items the council has previously discussed publicly and he declined offers to discuss them privately. He stated instead, he wants to have a very public discussion on this because of trust issues with the city management due to them being involved with the oversite functions and not having publicly disclosed the problems. Smart move. I know firsthand this is probably one of the most serious problems they will face in the very near future and a problem that will not go away because of the seriousness of the problems.
12:03 - 17:03 - Bonnie - She spoke of the importance of term limits, the arrougance of the city attorney Pete Smith and how poorly his actions replace on the city council and the city. Bonnie also spoke of the charter election and the improper acts of 6 of 7 council members and the improper acts of the Chamber of Commerce concerning election code violations. She described Pete Smith's dismissive attitude towards Mr. Gordan as just a citizen and he has not standing, the case is moot because the charter has been changed. Most disturbing was the charter election allowed the council to meet at places other than the city hall. If they wish to go to Antartica to hold a meeting, they are now allowed to do so.
17:21 - 18:54 - Mac - He was very concerned with the attitude of the city attorney. He views it as a time to dissassociate the City of Richardson from this person. He is correct, the citizens should demand the city officials retain a new city attorney. The city attorney is on the Sherrill park board of directors. He will be up to his eyeballs with problems when the issues concerning alcohol come to a very public light.
19:10 - 23:23 - Jim - Very concern about how the City of Richardson paid almost 10 times too much for three properties on Arapaho and lack of written future plans for those properties. The recent budget meetings showed the city to be short almost $2 million this year. When did the money comes from to over pay for these properties and is this what the taxpayers want?
23:40 - 26:37 - Nathan - Richardson is heading for a train wreck.
26:50 - 29:17 - Cheri - Concerned about the schemes they ccity uses to sweep money from one fund and put it into an unallocated fund for presumable play money.
All of these citizen are doing what citizens should, hold their local government accountable and get informed. More citizens need to see what is going on at city hall and get things straightened out. If the citizens do not get more involved, they will get what they have coming to them by their own choice. It takes work.
http://richardsontx.swagit.com/player.php?refid=12142009-50
1. 00:025 - 04:42 - Dave - It looks like Dave read most of the article he published on his website earlier. This came down to pointing out that the council can consider themselves "Tax and Spend Liberals" for the hiring of Fred Hill as a lobbyist for the City of Richardson. He pointed out the so-called enemies list of the Texas Association of Counties. To name a few, Libertarians, Club for Growth, Freedoms Works, Americans for Tax Reform, National Taxpayers Union, American Legislative Exchange, Sam Adams Alliance and the American Majority. All of these groups seek to make government smaller and more accountable along with lowering taxes.
He stated that the opposite of what these group want is higher taxes, bigger government, more rights for the government at the expense of fewer rights for the tax payers and less transparency.
Fred Hill has been hired as a lobbyist for the Texas Association of Counties. He has been hired to lobby against what the enemies of the Texas Association of Counties want. The city of Richardson pays Fred Hill the second largest fee, $75,000 of taxpayer funds to lobby against the resident of Richardson.
In summary, he called the called the city council's action the actions of "Tax and Spend liberals."
05:10 - 11:34 - Jimmy - He raise some very serious questions about the gold course. He is a very intelligent person who has done his homework. 18 TABC violations including counts of subterfuge. These are not items the council has previously discussed publicly and he declined offers to discuss them privately. He stated instead, he wants to have a very public discussion on this because of trust issues with the city management due to them being involved with the oversite functions and not having publicly disclosed the problems. Smart move. I know firsthand this is probably one of the most serious problems they will face in the very near future and a problem that will not go away because of the seriousness of the problems.
12:03 - 17:03 - Bonnie - She spoke of the importance of term limits, the arrougance of the city attorney Pete Smith and how poorly his actions replace on the city council and the city. Bonnie also spoke of the charter election and the improper acts of 6 of 7 council members and the improper acts of the Chamber of Commerce concerning election code violations. She described Pete Smith's dismissive attitude towards Mr. Gordan as just a citizen and he has not standing, the case is moot because the charter has been changed. Most disturbing was the charter election allowed the council to meet at places other than the city hall. If they wish to go to Antartica to hold a meeting, they are now allowed to do so.
17:21 - 18:54 - Mac - He was very concerned with the attitude of the city attorney. He views it as a time to dissassociate the City of Richardson from this person. He is correct, the citizens should demand the city officials retain a new city attorney. The city attorney is on the Sherrill park board of directors. He will be up to his eyeballs with problems when the issues concerning alcohol come to a very public light.
19:10 - 23:23 - Jim - Very concern about how the City of Richardson paid almost 10 times too much for three properties on Arapaho and lack of written future plans for those properties. The recent budget meetings showed the city to be short almost $2 million this year. When did the money comes from to over pay for these properties and is this what the taxpayers want?
23:40 - 26:37 - Nathan - Richardson is heading for a train wreck.
26:50 - 29:17 - Cheri - Concerned about the schemes they ccity uses to sweep money from one fund and put it into an unallocated fund for presumable play money.
All of these citizen are doing what citizens should, hold their local government accountable and get informed. More citizens need to see what is going on at city hall and get things straightened out. If the citizens do not get more involved, they will get what they have coming to them by their own choice. It takes work.
Saturday, December 5, 2009
Updated: Over-the-Top Overtime Compensation - Is there a Draft in Here?
To the City of Richardson Residents:
Based upon several anonymous insider reports who have raised serious allegations of extensive overtime compensation abuse, padding, and/or fraud in varying degrees that has been paid over the last few years in certain departments, and given that overtime compensation has been a well-chronicled and frequent area of abuse involving other municipalities in the past, extensive and detailed analysis was performed of the city’s 2008-2009 CAFR and the 2009-2010 finalized budget. The following is one insider tip received:
— Forwarded Message —
From: COR Employee
To: editor@cornews.net
Sent: Friday, August 21, 2009 2:59:39 PM
Subject: cornews: Car Allowances
This is an enquiry e-mail via http://www.cornews,net/ from: COR Employee
If you opted to make an open records request for the car allowance rules and mileage rules in the COR human resources policies and procedures you would see what King Keffler was doing is against his own rules (ie. using a city vehicle if you get a car allowance).The only time you can do this is if your car is broke or not large enough for the job. In addition, the on duty shift commanders for the fire department have a personal driver, a city Fire Department decaled SUV, and all three get a $492 car allowance. The Fire Chief often takes the fire department cars (Admin 1 or 2) for his own use while he get a personal car allowance as well. This city is so corrupt that I am disgusted to work here. If you really want to see corruption, request the overtime records of the fire department. Over 1 million in overtime for the FD alone.
Based upon several anonymous insider reports who have raised serious allegations of extensive overtime compensation abuse, padding, and/or fraud in varying degrees that has been paid over the last few years in certain departments, and given that overtime compensation has been a well-chronicled and frequent area of abuse involving other municipalities in the past, extensive and detailed analysis was performed of the city’s 2008-2009 CAFR and the 2009-2010 finalized budget. The following is one insider tip received:
— Forwarded Message —
From: COR Employee
To: editor@cornews.net
Sent: Friday, August 21, 2009 2:59:39 PM
Subject: cornews: Car Allowances
This is an enquiry e-mail via http://www.cornews,net/ from: COR Employee
If you opted to make an open records request for the car allowance rules and mileage rules in the COR human resources policies and procedures you would see what King Keffler was doing is against his own rules (ie. using a city vehicle if you get a car allowance).The only time you can do this is if your car is broke or not large enough for the job. In addition, the on duty shift commanders for the fire department have a personal driver, a city Fire Department decaled SUV, and all three get a $492 car allowance. The Fire Chief often takes the fire department cars (Admin 1 or 2) for his own use while he get a personal car allowance as well. This city is so corrupt that I am disgusted to work here. If you really want to see corruption, request the overtime records of the fire department. Over 1 million in overtime for the FD alone.
Analysis reveals that the city spent a staggering $3.6MM (MM = Millions and M = Thousands) in personnel overtime costs in the last fiscal year and has approved a similar budgeted level of $3.3MM in 2009-2010, the latter of which represents an incredible 4.0% of total estimated personnel-related costs of $82.7MM. Of this amount, $2.3MM or 66.9% (two-thirds) were allocated to the police, fire, and parks departments per the attached chart.
Overall Department Overtime XLS
While the proposed ($264.3M) or 7.4% decrease in personnel overtime costs for these three departments represents a small first step in the right direction, the sheer magnitude of these numbers clearly warrants the city council’s immediate attention and scrutiny, particularly when considering the impact of the current economic downturn, the ensuing stress on the city’s finances, and the city’s forecasted operating budget shortfall of ($1.8MM).
Based upon further in-depth analysis of salary and overtime compensation paid by these three major departments over the past two years using information provided by the city via a recent Open Records Act request, as summarized below and detailed in attachments, strong evidence appears to exist that the above-noted allegations indeed have substantial merit.
Along with a clear indication of a lack of proper internal controls, management oversight, and independent audit review of the city's payroll and overtime expenditures, further review and an immediate investigation by the city council appears to be warranted by the following summary analysis (as supported by the attached links to charts and spread sheet data on each department and on an overall-basis):
PARKS DEPARTMENT (59 Employees):
Parks Department XLS
Increase in total departmental gross compensation of 4.4% vs. city average of approximately 3.0% from 2008 to 2009 and average median salary increase in DFW for public and private sector of 1.8% (North Texas Region per federal labor statistics);
Increase in overtime compensation base rate from $27.75 per hour in 2008 to $29.21 in 2009, which represents an annual increase of 5.3% (appears to be paid using a full total base pay rate/scale per hour);
Average percentage of overtime compensation to total gross salary compensation per employee of 20.6% in 2008 and 19.0% in 2009 vs. city average of 4.0%;
In 2009, 23 of the 59 employees or 39.0% derived 20% or more of their total compensation from overtime pay, ranging on a percentage basis from 20.4% up to 47.4% and on a dollar-basis from $10,184.50 to $41,021.45;
Average OT hours per employee equaled 336 hours or 42 days in 2009 (down slightly from 46 days in 2008), with 5 employees claiming over 100 OT days in 2009 (ranging from 105 to 164 days) and 5 employees claiming over 100 OT days in 2008 (ranging from 105 days to 183 days) which appears excessive and highly questionable in comparison to an estimated total of 240 work days in a fiscal year (using a 40 hour work week for 52 weeks minus 2 weeks for federal holidays and 2 weeks for PTO/vacation);
Huge differentials in total compensation were noted between individuals holding the same job title/position that were mainly attributed to the overtime compensation being paid per employee; and,
One individual received the exact same overtime compensation rate at 37.29% of total gross compensation and reported the same level of OT work days of 105 days for both 2008 and 2009.
7 employees were found to have very unusual matching (plug?) figures for the amounts being reported for gross salary and overtime compensation data for both 2008 and 2009 as further detailed on the attached spreadsheet for the parks department.
FIRE DEPARTMENT (146 Employees):
Fire Department XLS
Increase in total departmental gross compensation of 5.7% vs. city average of approximately 3.0% from 2008 to 2009 and average median salary increase in DFW for public and private sector of 1.8% (North Texas Region per federal labor statistics);
Increase in overtime compensation base rate from $14.84 per hour in 2008 to $15.77 per hour in 2009, or an annual increase of 6.3% (appears to be paid on 50% of full total base pay rate/scale per hour);
Average percentage of overtime compensation to total gross salary compensation per employee of 11.9% in 2008 and 10.8% in 2009 vs. city average of 4.0%;
In 2009, 41 of the 146 employees or 28.1% derived 15% or more of their total compensation from overtime pay, ranging on a percentage basis from 15.2% up to 21.7%;
In 2009, 56 of the 146 employees or 38.4% received overtime pay over $10,000.00 ranging on a dollar-basis from $10,096.90 to $25,048.07; and,
Average OT hours per employee equaled 500 hours or 63 days in 2009 (down slightly from 65 days in 2008), with 35 of the 146 employees or 24.0% claiming over 100 OT days in 2009 (ranging from 101 to 147 days) and 39 of the 146 employees or 26.7% employees claiming over 100 OT days in 2008 (ranging from 103 days to 208 days) which appears excessive, highly questionable, and in some cases not humanly possible, in comparison to an estimated total of 240 work days in a fiscal year.
22 employees were found to have very unusual matching (plug?) figures for the amounts being reported for gross salary and overtime compensation data for both 2008 and 2009 as further detailed on the attached spreadsheet for the police department.
POLICE DEPARTMENT (202 Employees):
Police Department XLS
Increase in total departmental gross compensation of 6.7% vs. city average of approximately 3.0% from 2008 to 2009 and average median salary increase in DFW for public and private sector of 1.8% (North Texas Region per federal labor statistics);
Increase in overtime compensation base rate from $35.33 per hour in 2008 to $38.41 per hour in 2009, or an annual increase of 8.7% (appears to be paid at time and a half of full total base pay rate/scale per hour);
Average percentage of overtime compensation to total gross salary per employee of 6.1% in 2008 and 4.9% in 2009 vs. city average of 4.0%;
Overtime compensation being paid in terms of hours claimed and amounts paid was at a much lower level, but more broad-based in terms of dispersion amongst employees, with 191 of the total 202 employees or 94.6% receiving overtime pay averaging $2,994.24 based upon an average of 78.2 overtime hours or 10 overtime days claimed;
In 2009, 35 of the 202 employees or 17.3% received overtime compensation exceeding $5,000.00 that represented at least 10.0% of total compensation received, with the amounts ranging on a dollar-basis from $5,056.40 to $13,812.33 and ranging on a percentage basis from 10.04% up to 25.2%; and,
28 employees were found to have very unusual matching (plug?) figures for the amounts being reported for gross salary and overtime compensation data for both 2008 and 2009 as further detailed on the attached spreadsheet for the police department.
The city council should exercise, perform, and execute their inherent sworn fiscal, fiduciary, regulatory, and legal duties and responsibilities to the citizens of Richardson, as outlined in the provisions of the City Charter, by taking the following immediate action:
1) Instruct the city manager to implement an immediate across the board freeze on all overtime compensation;
2) Direct the city manager to conduct an immediate departmental review of all budgeted overtime compensation and implement an action plan with the target goal of a reduction in overall overtime compensation to substantially reduce or eliminate the budgeted operating shortfall, including offering compensatory time off (comp-time) for overtime work performed, while maintaining the proper level of police and fire/emergency services to the residents; and,
3) Authorize the finance and audit committee to immediately engage the city’s public accounting firm, KPMG, LLP, or another reputable independent 3rd-party accounting firm, to conduct a full and complete audit of all payroll records, documentation, and related disbursements over the past 3-5 years, including a full investigation into all overtime compensation paid to determine whether excessive and/or inappropriate funds have been disbursed, obtain the necessary reimbursements for any minor or inadvertent over payments, and submit criminal referrals to the appropriate independent outside law enforcement and/or prosecutorial agencies for suspected or substantiated instances of purposeful and willful overtime compensation abuse and/or malfeasance.
Saturday, November 14, 2009
Friday, November 13, 2009
Relating to the Open Meetings Act
More than you probably ever wanted to know...http://www.oag.state.tx.us/open/og_faqs.shtml
What is the Open Meetings Act?
The Open Meetings Act, codified at chapter 551 of the Government Code, provides that meetings of governmental bodies must be open to the public except for expressly authorized executive sessions. The Act also provides that the public must be given notice of the time, place, and subject matter of meetings of governmental bodies.
What is a quorum and what is its significance?
The Open Meetings Act defines a "quorum" as a majority of the governing body unless otherwise defined by applicable law, rule, or charter. A quorum of a governmental body's members must be present in order for the governmental body to exercise the authority delegated to it.
Under some circumstances, less than a quorum of a governmental body may be subject to the Open Meetings Act.
Who may attend an executive session? (hint - your girlfriends are excluded)
Only the members of a governmental body have a right to attend an executive session, except that the governmental body's attorney must be present when it meets under section 551.071. Thus, a commissioners court may exclude the county clerk from an executive sessions because the county clerk is not a member of the court.
A governmental body has discretion to include in an executive session officers and employees of the governmental body whose participation is necessary to the matter under consideration. Thus, a school board may require its superintendent of schools to attend all executive sessions of the board without violating the act.
A commissioners court may include the county auditor in a meeting closed under section 551.071 to consult with its attorney if the court determines that (1) the auditor's interests are not adverse to the county's; (2) the auditor's presence is necessary for the court to communicate with its attorney; and (3) the county auditor's presence will not waive the attorney-client privilege. If the meeting is closed under an executive session provision other than section 551.071, the commissioners court may include the county auditor if the auditor's interests are not adverse to the county and his participation is necessary to the discussion.
Section 551.072 of the Government Code allows a governmental body to deliberate the purchase of real estate in an executive session if open deliberation will have a detrimental effect on its negotiating position with a third party. It is improper to allow a third party access to a governmental body's deliberations under 551.072, but the city manager could advise the city council in an executive session of his negotiations with a third party.
The attorney-client privilege permits the six members of a school board who have been sued by another board member to exclude the plaintiff board member from their executive session meetings held to consult with the board's attorney about this lawsuit.
Only the members of a governmental body have a right to attend an executive session, except that the governmental body's attorney must be present when it meets under section 551.071. Thus, a commissioners court may exclude the county clerk from an executive sessions because the county clerk is not a member of the court.
A governmental body has discretion to include in an executive session officers and employees of the governmental body whose participation is necessary to the matter under consideration. Thus, a school board may require its superintendent of schools to attend all executive sessions of the board without violating the act.
A commissioners court may include the county auditor in a meeting closed under section 551.071 to consult with its attorney if the court determines that (1) the auditor's interests are not adverse to the county's; (2) the auditor's presence is necessary for the court to communicate with its attorney; and (3) the county auditor's presence will not waive the attorney-client privilege. If the meeting is closed under an executive session provision other than section 551.071, the commissioners court may include the county auditor if the auditor's interests are not adverse to the county and his participation is necessary to the discussion.
Section 551.072 of the Government Code allows a governmental body to deliberate the purchase of real estate in an executive session if open deliberation will have a detrimental effect on its negotiating position with a third party. It is improper to allow a third party access to a governmental body's deliberations under 551.072, but the city manager could advise the city council in an executive session of his negotiations with a third party.
The attorney-client privilege permits the six members of a school board who have been sued by another board member to exclude the plaintiff board member from their executive session meetings held to consult with the board's attorney about this lawsuit.
Do public officers and employees have the right to require the governmental body to conduct deliberations about them in executive session when the governmental body is conducting such a discussion in an open meeting?
No. Although an employee who is the subject of personnel deliberations under section 551.074 has a right to an open hearing, he has no right to insist upon a closed hearing.
No. Although an employee who is the subject of personnel deliberations under section 551.074 has a right to an open hearing, he has no right to insist upon a closed hearing.
May a governmental body, with its attorney, meet in executive session under 551.071 with an opposing party to discuss certain legal issues in an effort to avoid litigation?
No. Section 551.071 does not permit an executive session held to discuss potential litigation with the opposing party.
No. Section 551.071 does not permit an executive session held to discuss potential litigation with the opposing party.
May a governmental body convene into executive session to discuss the appointment of individuals to an advisory committee?
No. A governmental body may not meet in executive session to discuss the appointment of members to an advisory committee because members of an advisory committee are not public officers.
No. A governmental body may not meet in executive session to discuss the appointment of members to an advisory committee because members of an advisory committee are not public officers.
May a governmental body meet in executive session to discuss information that is exempt from disclosure under one of the exceptions of the Public Information Act or that is confidential by law?
Closed meetings, other than those authorized by certain provisions in the Open Meetings Act permitting a closed session, may be held only where specifically authorized by law. The exceptions from disclosure in the Public Information Act do not create implied exceptions to the Open Meetings Act.
Closed meetings, other than those authorized by certain provisions in the Open Meetings Act permitting a closed session, may be held only where specifically authorized by law. The exceptions from disclosure in the Public Information Act do not create implied exceptions to the Open Meetings Act.
How detailed should a certified agenda be?
The "certified agenda" of an executive session must contain at least a brief summary of every specific subject actually discussed, not just those originally intended for discussion. It need not contain a detailed summary or paraphrase of each question or idea presented on the general subject of the executive session. Enough detail should be included to enable a district judge to determine whether the Act has been violated.
If a governmental body is unable to discuss all items posted on their notice (agenda) due to time constraints, may it recess the meeting until the next day without having to post another notice?
A meeting may be continued to the following day without posting a new notice. If a meeting is continued to any day other than the one immediately following, the governmental body must post a new notice.
The "certified agenda" of an executive session must contain at least a brief summary of every specific subject actually discussed, not just those originally intended for discussion. It need not contain a detailed summary or paraphrase of each question or idea presented on the general subject of the executive session. Enough detail should be included to enable a district judge to determine whether the Act has been violated.
If a governmental body is unable to discuss all items posted on their notice (agenda) due to time constraints, may it recess the meeting until the next day without having to post another notice?
A meeting may be continued to the following day without posting a new notice. If a meeting is continued to any day other than the one immediately following, the governmental body must post a new notice.
May a member of a governmental body make statements to members of the press regarding subjects that were discussed in an executive session?
The Open Meetings Act does not prohibit members of a governmental body or other persons in attendance at an executive session from making public statements about the subject matter of that session. However, there may be privacy laws or policy concerns which may prevent such persons from divulging the deliberations of a closed session.
The Open Meetings Act does not prohibit members of a governmental body or other persons in attendance at an executive session from making public statements about the subject matter of that session. However, there may be privacy laws or policy concerns which may prevent such persons from divulging the deliberations of a closed session.
May a member of a governmental body vote by proxy?
No. A common law rule prevents a member of a governmental body from submitting a written vote without attending the meeting of the body.
Is a governmental body required to let citizens speak at their meetings?
No. The purpose of the Open Meetings Act is to ensure the public's access to meetings of governmental bodies so that they have the opportunity to be informed concerning the transactions of public business. It does not provide a public forum for every citizen wishing to express an opinion on a matter. However, if the governmental body decides to allow citizens to speak up, it must not unfairly discriminate, but may establish reasonable restraints on the number, length, and frequency of presentations.
No. The purpose of the Open Meetings Act is to ensure the public's access to meetings of governmental bodies so that they have the opportunity to be informed concerning the transactions of public business. It does not provide a public forum for every citizen wishing to express an opinion on a matter. However, if the governmental body decides to allow citizens to speak up, it must not unfairly discriminate, but may establish reasonable restraints on the number, length, and frequency of presentations.
Who enforces the criminal provisions of the act?
District courts have jurisdiction over criminal violations of the Act as misdemeanors involving official misconduct. Thus, complaints should be presented to the district attorney or criminal district attorney. The Office of the Attorney General has no independent enforcement authority, but local prosecutors may request assistance from the Attorney General in prosecuting criminal cases, including those arising under the Open Meetings Act.
District courts have jurisdiction over criminal violations of the Act as misdemeanors involving official misconduct. Thus, complaints should be presented to the district attorney or criminal district attorney. The Office of the Attorney General has no independent enforcement authority, but local prosecutors may request assistance from the Attorney General in prosecuting criminal cases, including those arising under the Open Meetings Act.
What kind of notice of meetings does the Open Meetings Act require?
There are many questions about the adequacy of notice and no short answer to them. These questions need to be addressed individually in the context of the relevant facts, so we usually cannot do more than state the test for adequacy of notice and possibly mention some of the cases that have applied the test.
Section 551.041 of the Government Code provides that "[a] governmental body shall give written notice of the date, hour, place, and subject of each meeting held by the governmental body." Most of the questions about notice concern the adequacy of the subject. The notice must identify the subjects of all deliberations, including those that may take place in executive session. The notice must be sufficient to inform the general public of the subjects to be considered, and if a subject is of particular interest to the community, more specificity may be required.
Many governmental bodies post the agenda of the meeting with the notice or as the notice, so many people use the terms "notice" and "agenda" interchangeably to refer to the posted document.
Revised: October 09 2009
There are many questions about the adequacy of notice and no short answer to them. These questions need to be addressed individually in the context of the relevant facts, so we usually cannot do more than state the test for adequacy of notice and possibly mention some of the cases that have applied the test.
Section 551.041 of the Government Code provides that "[a] governmental body shall give written notice of the date, hour, place, and subject of each meeting held by the governmental body." Most of the questions about notice concern the adequacy of the subject. The notice must identify the subjects of all deliberations, including those that may take place in executive session. The notice must be sufficient to inform the general public of the subjects to be considered, and if a subject is of particular interest to the community, more specificity may be required.
Many governmental bodies post the agenda of the meeting with the notice or as the notice, so many people use the terms "notice" and "agenda" interchangeably to refer to the posted document.
Revised: October 09 2009
Monday, November 9, 2009
Richardson Coalition Sezs....
Editorial Regarding Transparency and Ethics Follow the Money
Pay a visit to this site: http://www.richardsoncoalition.org/Editorials.html#theEisemannCenter
Scroll down and you will find this:
“Recently one of our readers asked:
“How much money has the Richardson Coalition given to politicians during the 2007 and 2009 City Council elections?”
That was a fair question. Here is the answer:
Funds donated by the Richardson Coalition to political candidates:
Total $
2007 0
2008 0
2009 0
The Richardson Coalition is about policy and principles.
We have watched with interest the unfolding of the campaign waged by 17 aspiring citizens for City Council seats. To our memory, never have so many sought this office at the same time in Richardson.”
Hmm. You don't say?
Visit this site to see the actual campaign reports for the 2009 elections:
http://dc-tm.blogspot.com/2009/11/campaign-finance-reports.html
On the required campaign filings each candidate lists campaign contributions from the PAC, “Richardson Resident for Responsible Government.”
Left Hand-Right Hand.
Pay a visit to this site: http://www.richardsoncoalition.org/Editorials.html#theEisemannCenter
Scroll down and you will find this:
“Recently one of our readers asked:
“How much money has the Richardson Coalition given to politicians during the 2007 and 2009 City Council elections?”
That was a fair question. Here is the answer:
Funds donated by the Richardson Coalition to political candidates:
Total $
2007 0
2008 0
2009 0
The Richardson Coalition is about policy and principles.
We have watched with interest the unfolding of the campaign waged by 17 aspiring citizens for City Council seats. To our memory, never have so many sought this office at the same time in Richardson.”
Hmm. You don't say?
Visit this site to see the actual campaign reports for the 2009 elections:
http://dc-tm.blogspot.com/2009/11/campaign-finance-reports.html
On the required campaign filings each candidate lists campaign contributions from the PAC, “Richardson Resident for Responsible Government.”
Left Hand-Right Hand.
Thursday, October 29, 2009
Budget (Fudge-it?) Update: A Recipe for Eventual Disaster
The following open letter to the mayor and city council was posted on August 29, 2009, none of which has been (positively) responded to or addressed by the city council in the passage of the 2009-2010 budget.
Little by little, the truth is floating to the surface like a dead carcass and just in time for Halloween, such as the recent press release on the financial difficulties of Legacy Bank with close ties with the Chamber of Commerce and City of Richardson.
Keep your eyes and ears open and tuned in on developments as they unfold at this website, some of which are outlined below.
If one is upset about the increasing level of debt, wasteful spending, fraud, corruption, abuse, and undue and unhealthy influence of politics and individual, corporate, and special interests and lobbyists on the federal level, they should be equally livid about what is going on with local City of Richardson governance.
We ask that you get informed, be active, become involved, speak up, and/or support those who truly have, place, and are working for the interests of the general public and common good above all else, including the all-mighty dollar, material possessions, and/or ego.
August 29, 2009
To the Mayor and City Councilmen of the City of Richardson:
When each member of the city council took the oath of office, they solemnly promised and swore to observe and enforce the provisions of the Charter and Ordinances of the City of Richardson, support the United States Constitution, obey the laws of the United States and the State of Texas, faithfully discharge the duties of the office of Councilor of the City of Richardson, but most importantly, to perform and execute to the best of their abilities the inherent fiduciary, fiscal, regulatory/compliance, and legal duties and responsibilities of the position.
Over the years, honorable, fair, reasonable, and just fulfillment of this sacred vow to the people, as well as the City Government’s observation and enforcement of the provisions of the Charter and Ordinances, has been greatly compromised and undermined by the politically-minded and profit-driven corporate and individual power brokers and interests who wield an undue influence on the city’s affairs at the detriment of the individual resident/taxpayer.
Serious budgetary/fiscal concerns, wasteful and inappropriate spending, insider and/or above-market vendor contracts being awarded without competitive bidding, risky, costly, potentially unsafe and sound, and/or imprudent deposit, investment, and debt management practices, rampant conflicts of interest and ethical breaches, poor or non-existent independent audit and internal control procedures, questionable accounting practices, and the appearance of purposeful and willful and/or unjustifiably negligent violations of law, rule, statute, and ordinance, often in consultation or participation with the office of city attorney, are some of the many serious issues that have and are being brought to the city council’s attention with this correspondence.
We strongly urge the city council to reassert the proper chain of command and authority over the city manager’s office to immediately address the issues being raised, some of which are outlined below, in a forthright, transparent, and open manner.
Top priorities should be to re-establish the rule of law, pass a fiscally-conservative budget without additional debt with controlled and efficient spending, eliminate the undue influence of for-profit corporate and individual power brokers involving city business by striking a proper balance between economic development/growth and the basic home, community, and quality of life needs of the general population, while protecting and preserving individual property, civil, and constitutional rights.
Furthermore, we respectfully request a detailed, complete, and full response to the issues, concerns and questions noted herein with the allowance of free-flowing comments and dialogue between city council members, city staff, and all interested citizens of this city at the next scheduled budget hearing on August 31, 2009, and call for decisive and appropriate action to be taken by the city council before approval and enactment of the final budget on September 14, 2009.
Respectfully,Honest, Informed, and Concerned Citizens of the City of Richardson
Major Bullet Points – See Below for Detail
1) Multi-million dollar and increasing operating shortfalls with huge amount of undisclosed debt of the Eisemann Center;
2) Long-list of underperforming projects with $5.7MM in developer incentives paid in 2008-2009 and an unknown amount in 2009-2010;
3) Proposed $700.0M in Chamber of Commerce contributions that are specifically designated for economic development, but with 80% of these contributions being diverted to fund payroll costs and operating expenses, which are typically funded by the private sector;
4) $31.6MM in defeased G.O. bonds and C.O. obligations removed from city books with unknown value of the monetary assets placed in a irrevocable trust and whether they are sufficient to fully retire the defeased debt;
5) $10.9MM in additional borrowings with (1.8MM) operating shortfall and apparent discrepancies between actual and projected annual debt service requirements for 2009-2010;
6) Unsafe and unsound placement of 98% of the cities unrestricted cash with two local banks and 44.2% of unrestricted investments in a complex Flexible Repurchase Agreement with high systemic risk and institution/security asset quality concerns and issues;
7) 100% of all city purchases of office supplies are done through a broker instead of wholesalers and subject to competitive bidding;
8) Privately-negotiated vender contract with the Sherrill Park Municipal Golf Professional without competitive bidding with an excessive salary at 3X the high-end for municipal golf professional salaries and other unfavorable contract clauses and no audit in 17 years;
9) Highly questionable hiring of a former legislator as a paid for consultant (i.e. lobbyist) to represent the city’s interests for $6,250 per month or $75,000 plus expenses per year, with this same individual having contracts with other cities/agencies totaling $600,000;
10) $400,000 annual salary being paid to the Chamber of Commerce President without a contract (per response to open records request but in process of being substantiated or refuted by obtaining copy of contract);
11) $174.0MM in unfunded retirement health and pension benefits with an increasing shortfall and future debt burden on the residents;
12) ($1.8MM) operating shortfall without a zero-based budget despite city councilmen advocating same during prior election cycle;
13) $448.0M or 1.9% increase in payroll spending after 3.0% increase in 2008-2009 that was well above the 1.8% increase in salaries in the North Texas Region per federal labor statistics including the private sector;
14) City expenditures are increasing by $3.3MM or 2.0% despite an economic recession and declining revenues, resulting in the above-noted operating shortfall and increased leverage position;
15) Total estimated salary and benefits per employee of $82,780, and after excluding fire and police personnel, the top 22 city officials make an estimated $169,721 per employee and the top 134 make an estimated $96,086 per employee;
16) Personnel overtime costs of $3.6MM in 2008-2009 and budgeted at $3.3MM representing 4.0% of total personnel costs in 2009-2010, with 66.9% of the total costs being allocated to three departments with insiders alleging the existence of substantial overtime abuse;
17) 141 employees or 14.4% of employee base receive annual car allowances totaling $841,548 or $5,958 per employee, along with allegations or admissions of improper usage by family members and/or dual receipt of car allowances and use of fleet/city vehicles;
18) City Manager has unilateral discretion to cash out on accrued but unused sick days, a practice that is unheard of even in the private sector, and reportedly pocketed $250,000 in 2007 and unknown amounts in 2008-2009;
19) City Manager’s total compensation package estimated at $357,067 in 2009-2010 is the highest in the state on a per-capita basis;
20) Deputy City Manager’s total compensation package estimated at $248,452 next year is the highest in the state on a per-capita basis;
21) City is proposing hidden tax increase with the creation of the storm water utility fund with existing general fund allocation of 1.0MM left in place to be given to developers per Mayor Slagel;
22) Listing of additional pork or questionable budget items include a new $5,000 furniture set for the Fire Battalion Chief, $889,050 in unallocated/unspecified expenses, $202,020 in library insurance costs, $595,500 in Economic Development Agreements, free Eisemann Center tickets to city council and senior city officials, and free golf rounds to city officials at the Sherrill Park Golf Course.
23) Concerned residents propose a redirection of wasteful and extravagant spending to fund increased crime prevention, criminal investigations, drug interdiction, and related administration costs given an increasing crime rate, the recent delayed 911 response time incident, and anonymous insider reports of morale and dissention within the RPD apparently involving funding issues vs. policy directives and other serious internal matters.
24) Numerous alleged and/or suspected purposeful and willful or unjustifiably negligent violations of law, rule, ordinance, city charter, statute, act, and/or regulation, and suspected government waste, fraud, and corruption, are resulting in an increasing number of complaints, legal filings, and outside party investigations, and growing media scrutiny, all of which reflect very poorly on the city.
Little by little, the truth is floating to the surface like a dead carcass and just in time for Halloween, such as the recent press release on the financial difficulties of Legacy Bank with close ties with the Chamber of Commerce and City of Richardson.
Keep your eyes and ears open and tuned in on developments as they unfold at this website, some of which are outlined below.
If one is upset about the increasing level of debt, wasteful spending, fraud, corruption, abuse, and undue and unhealthy influence of politics and individual, corporate, and special interests and lobbyists on the federal level, they should be equally livid about what is going on with local City of Richardson governance.
We ask that you get informed, be active, become involved, speak up, and/or support those who truly have, place, and are working for the interests of the general public and common good above all else, including the all-mighty dollar, material possessions, and/or ego.
August 29, 2009
To the Mayor and City Councilmen of the City of Richardson:
When each member of the city council took the oath of office, they solemnly promised and swore to observe and enforce the provisions of the Charter and Ordinances of the City of Richardson, support the United States Constitution, obey the laws of the United States and the State of Texas, faithfully discharge the duties of the office of Councilor of the City of Richardson, but most importantly, to perform and execute to the best of their abilities the inherent fiduciary, fiscal, regulatory/compliance, and legal duties and responsibilities of the position.
Over the years, honorable, fair, reasonable, and just fulfillment of this sacred vow to the people, as well as the City Government’s observation and enforcement of the provisions of the Charter and Ordinances, has been greatly compromised and undermined by the politically-minded and profit-driven corporate and individual power brokers and interests who wield an undue influence on the city’s affairs at the detriment of the individual resident/taxpayer.
Serious budgetary/fiscal concerns, wasteful and inappropriate spending, insider and/or above-market vendor contracts being awarded without competitive bidding, risky, costly, potentially unsafe and sound, and/or imprudent deposit, investment, and debt management practices, rampant conflicts of interest and ethical breaches, poor or non-existent independent audit and internal control procedures, questionable accounting practices, and the appearance of purposeful and willful and/or unjustifiably negligent violations of law, rule, statute, and ordinance, often in consultation or participation with the office of city attorney, are some of the many serious issues that have and are being brought to the city council’s attention with this correspondence.
We strongly urge the city council to reassert the proper chain of command and authority over the city manager’s office to immediately address the issues being raised, some of which are outlined below, in a forthright, transparent, and open manner.
Top priorities should be to re-establish the rule of law, pass a fiscally-conservative budget without additional debt with controlled and efficient spending, eliminate the undue influence of for-profit corporate and individual power brokers involving city business by striking a proper balance between economic development/growth and the basic home, community, and quality of life needs of the general population, while protecting and preserving individual property, civil, and constitutional rights.
Furthermore, we respectfully request a detailed, complete, and full response to the issues, concerns and questions noted herein with the allowance of free-flowing comments and dialogue between city council members, city staff, and all interested citizens of this city at the next scheduled budget hearing on August 31, 2009, and call for decisive and appropriate action to be taken by the city council before approval and enactment of the final budget on September 14, 2009.
Respectfully,Honest, Informed, and Concerned Citizens of the City of Richardson
Major Bullet Points – See Below for Detail
1) Multi-million dollar and increasing operating shortfalls with huge amount of undisclosed debt of the Eisemann Center;
2) Long-list of underperforming projects with $5.7MM in developer incentives paid in 2008-2009 and an unknown amount in 2009-2010;
3) Proposed $700.0M in Chamber of Commerce contributions that are specifically designated for economic development, but with 80% of these contributions being diverted to fund payroll costs and operating expenses, which are typically funded by the private sector;
4) $31.6MM in defeased G.O. bonds and C.O. obligations removed from city books with unknown value of the monetary assets placed in a irrevocable trust and whether they are sufficient to fully retire the defeased debt;
5) $10.9MM in additional borrowings with (1.8MM) operating shortfall and apparent discrepancies between actual and projected annual debt service requirements for 2009-2010;
6) Unsafe and unsound placement of 98% of the cities unrestricted cash with two local banks and 44.2% of unrestricted investments in a complex Flexible Repurchase Agreement with high systemic risk and institution/security asset quality concerns and issues;
7) 100% of all city purchases of office supplies are done through a broker instead of wholesalers and subject to competitive bidding;
8) Privately-negotiated vender contract with the Sherrill Park Municipal Golf Professional without competitive bidding with an excessive salary at 3X the high-end for municipal golf professional salaries and other unfavorable contract clauses and no audit in 17 years;
9) Highly questionable hiring of a former legislator as a paid for consultant (i.e. lobbyist) to represent the city’s interests for $6,250 per month or $75,000 plus expenses per year, with this same individual having contracts with other cities/agencies totaling $600,000;
10) $400,000 annual salary being paid to the Chamber of Commerce President without a contract (per response to open records request but in process of being substantiated or refuted by obtaining copy of contract);
11) $174.0MM in unfunded retirement health and pension benefits with an increasing shortfall and future debt burden on the residents;
12) ($1.8MM) operating shortfall without a zero-based budget despite city councilmen advocating same during prior election cycle;
13) $448.0M or 1.9% increase in payroll spending after 3.0% increase in 2008-2009 that was well above the 1.8% increase in salaries in the North Texas Region per federal labor statistics including the private sector;
14) City expenditures are increasing by $3.3MM or 2.0% despite an economic recession and declining revenues, resulting in the above-noted operating shortfall and increased leverage position;
15) Total estimated salary and benefits per employee of $82,780, and after excluding fire and police personnel, the top 22 city officials make an estimated $169,721 per employee and the top 134 make an estimated $96,086 per employee;
16) Personnel overtime costs of $3.6MM in 2008-2009 and budgeted at $3.3MM representing 4.0% of total personnel costs in 2009-2010, with 66.9% of the total costs being allocated to three departments with insiders alleging the existence of substantial overtime abuse;
17) 141 employees or 14.4% of employee base receive annual car allowances totaling $841,548 or $5,958 per employee, along with allegations or admissions of improper usage by family members and/or dual receipt of car allowances and use of fleet/city vehicles;
18) City Manager has unilateral discretion to cash out on accrued but unused sick days, a practice that is unheard of even in the private sector, and reportedly pocketed $250,000 in 2007 and unknown amounts in 2008-2009;
19) City Manager’s total compensation package estimated at $357,067 in 2009-2010 is the highest in the state on a per-capita basis;
20) Deputy City Manager’s total compensation package estimated at $248,452 next year is the highest in the state on a per-capita basis;
21) City is proposing hidden tax increase with the creation of the storm water utility fund with existing general fund allocation of 1.0MM left in place to be given to developers per Mayor Slagel;
22) Listing of additional pork or questionable budget items include a new $5,000 furniture set for the Fire Battalion Chief, $889,050 in unallocated/unspecified expenses, $202,020 in library insurance costs, $595,500 in Economic Development Agreements, free Eisemann Center tickets to city council and senior city officials, and free golf rounds to city officials at the Sherrill Park Golf Course.
23) Concerned residents propose a redirection of wasteful and extravagant spending to fund increased crime prevention, criminal investigations, drug interdiction, and related administration costs given an increasing crime rate, the recent delayed 911 response time incident, and anonymous insider reports of morale and dissention within the RPD apparently involving funding issues vs. policy directives and other serious internal matters.
24) Numerous alleged and/or suspected purposeful and willful or unjustifiably negligent violations of law, rule, ordinance, city charter, statute, act, and/or regulation, and suspected government waste, fraud, and corruption, are resulting in an increasing number of complaints, legal filings, and outside party investigations, and growing media scrutiny, all of which reflect very poorly on the city.
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