Friday, August 22, 2008

Pay to Play Feedback

After my blog about municipal audits and their relationship with pay to play in New Jersey, I received an interesting phone call. An influential state legislator who shall go nameless reached out to me, scolding me for "going after" Plainfield's audit firm.

It's as if he wanted to confirm my problem with the way Plainfield selects its auditor. Clearly his constituent for this phone call was the audit company and not the taxpaying citizens of Plainfield. That's the problem in a nutshell. The interests of the few come before the interests of the people.

For the record, I have absolutely no problem with the work of this audit firm. They have always answered my questions about the annual audit and budgets in a professional manner.

I do have a problem when a local political leader who does a good deal of fundraising calls to pressure a Councilman simply because that Councilman is advocating a position for limits on pay to play. I have an even bigger problem when that state legislator admits to me that he has received contributions from the very same audit firm I mentioned in my recent blog.

Let me be very clear: my problem is not with the audit firm. They are in the same boat as all New Jersey audit firms serving the public sector. My problem is with the few legislators who get the benefits of pay to play at the expense of the citizens of New Jersey.

Wednesday, August 20, 2008

Muhlenberg For Sale: clarification needed

Today's Courier News front page story is about Muhlenberg Hospital as discussed by City Council members and citizens at last nights Plainfield Council meeting. At the meeting I stated that the sale of the hospital is a private transaction but that the hospital and the Solaris system is so heavily funded/subsidized by taxpayer monies and supported by a property tax exemption that citizens have a financial interest in the sale. I asked the Council committee on Muhlenberg to take this into consideration as an issue to pursue. I stated that this could be an action item to bring to the regulators and legislators who have oversight on the hospital.

After the meeting I was asked by the Courier News reporter to explain my statement. He quoted me in the news story accurately. Unfortunately he mistakenly said I was calling for legal action by the council. I have called the Courier and asked for a follow-up correction to be made to clarify my position. News flash - after writing this blog the Courier reporter called to acknowldge the mistake and said the correction would be printed in Thursdays paper.

My position is that the Council committee on Muhlenberg seriously consider recommending back to Council the following: we request the Commissioner of Health to work with us and Solaris to make the hospital sale a more public process. This can be done in a number of ways. One would be to have an appraisal done to set a minimum bid for Muhlenberg and then do a competitive bidding process - all bids to be opened in public. There are others options such as legislative action by the New Jersey Legislature to make this sale process transparent. That will be up to the Council's Muhlenberg committee to consider.

Another point of clarification: when I say "minimum bid" I am referring to more than just the dollar amount. I mean medical services as well.

Friday, August 15, 2008

Pay to Play and audit firms

I read with interest a story in the Ledger about cosy deals between local governments and the firms that do their annual independent financial audits. It triggered some thoughts about Plainfield's audits:

1. Suplee Clooney have done Plainfields' municipal audits for many years. Are they a pay to play vendor? In order to be a successful government contractor in New Jersey, which they are, the answer is almost assuredly yes. Check the ELEC campaign contribution reports for Assemblyman Green, the state Democratic and Republican parties, etc. They should be there. Don't get me wrong. They seem to do a good job in Plainfield.

2. There are many good audit firms with municipal experience in New Jersey. I think Plainfield should go out to bid. Nothing against Suplee Clooney. Maybe when we've used a different firm for a number of years, we might want to go out to bid again and Suplee Cloney would win. And they are good enough that if pay to play was abolished, they'd do just fine. My guess is they would probably appreciate life without pay to play. But my concern is not just pay to play - see next.

3. Our city financial audit reflects on the entire municipal operation. It reflects on Mayor, Council and staff. But practically speaking the staff handle the fiscal transactions so the audit, to a large degree, is about the staff performance. And when the same audit firm is used for many years, a friendliness, even a cosiness develops between auditor and the staff. For that reason, fiscal oversight experts recommend changing audit firms every so often. I suggested this a few years ago. The response - why change when they do such good work. What do you think, reader?

4. Which brings me to my last thought. I said the audit is mostly on staff performance. It also reflects on the governing body's fiscal oversight performance. We, the City Council, vote to approve the annual audit and corrective action plans for any "findings" by the auditors. We could take it one step further. We councillors could initiate a bidding process for the audit contract and actually select the audit firm. It doesn't quite seem right that the staff recommend the firm that is mostly paid to audit them. This approach is not required by state law but it does pass the test of good fiscal oversight.

So pay to play and familiarity are obstacles to a truly independent audit. The first problem is more complex and ultimately needs a system wide solution. The second could be solved locally any given year.