It’s not only a matter of public trust, but Santa Fe could be jeopardizing critical funding. So goes the warning over the city’s persistently late audit from Stephanie Telles, a director with the State Auditor’s government accountability office.
She’s concerned about Santa Fe’s books.
As it stands, the City of Santa Fe’s fiscal year 2021 audit is six months late. And the city is still moving slowly. Following the departure of the professional auditing firm, CliftonLarsonAllen, in April, the State Auditor’s Office announced that same month its intention to intervene in the capital city, given the “worsening fiscal mismanagement.”
The latest step came after several letters of concern sent to the city over the past two years, documenting the tardiness of audits and troubling findings, including “insufficient internal controls over financial reporting.”
Mayor Alan Webber, now six months into his second term, originally campaigned on a promise to clean up the money mess.
He still sees the current situation as an improvement since he took over City Hall.
“If you go back and revisit what the McHard report said about the condition of our financial operations, over a period of time, that we inherited, we’ve made substantial progress,” Webber tells SFR. The 2017 McHard report offered a major indictment of the city’s financial management and argued there was a significant potential for fraud.
Webber points to the addition of systems to safeguard against fraud and abuse and technology to track financial data.
The attempt to modernize the city’s business operations began in 2018 by moving over transactions to the Enterprise Resource Planning systems, which officials say has streamlined financial functions.
But it seems that efforts to bring the city up to speed with the 21st century are still in the process.
“What we’ve seen is, sort of, the modernization of city government,” says City Manager John Blair. “And part of what [we] are working on now is about putting the pieces in place within the finance department to provide that stability for our finance team and finance director.”
Though he wasn’t with the city at the time of its introduction to city employees, Interim Assistant Finance Director Ricky Bejarano says not all the city employees who are supposed to use the ERP system are proficient at it. “What most likely happened is that there was just not enough intense training,” he says.
That lack of training, and later the pandemic-driven chaos that came from attempts to reconcile funds in the city’s bank accounts, have led to the current situation.
“This is a matter of public trust. When the city—or any governmental entity that receives and expends public funds—fails to prioritize a statutorily mandated requirement…citizens should be concerned,” Telles writes in an emailed response to SFR’s questions.
“An annual audit is essential to delivering an objective and independent review of the city’s financial reporting and to help provide accountability to the use of public funds,” Telles writes.
Bejarano, who has decades of experience in government accounting, says the city’s predicament with late audits is concerning, but he’s seen worse situations in his career.
“What happened was that we got out of skew with the books of records and having to go back and find those transactions and make sure that they’re posted correctly,” says Bejarano, though “there’s no indication currently that money was embezzled.”
Despite this reassurance, Telles says there’s still fertile ground in Santa Fe for waste, fraud and abuse.
“Until the City completes the work that must be done, and timely, they cannot be audited. You cannot protect what’s there if you don’t know what you do or don’t have,” she writes.
Blair and Bejarano point to new hires the city is making within the Finance Department, including a controller and treasury officer to join the finance team and a citywide compliance officer to keep track of deadlines.
Blair also notes the city is looking to move employees around to better meet the Finance Department’s needs.
“We’re also working with all employees across city government who interact with the Finance Department so that they know their responsibilities,” Blair says. “We’re trying to really expand on the ability of the department to function successfully both as its own entity but also working with every other piece of city government.”
Bejarano notes the need for more stability within the department to ensure the city submits audits on time in the future.
Over the last decade the city has hosted a revolving door of finance directors. Since Kathryn Raveling stepped down for the final time in September 2011—after she had retired and was rehired less than a year later—the city has hired five directors.
The most recent to hold the role, Mary McCoy, stopped working for the city in April—just days after the auditor’s announcement.
Webber notes that McCoy, who started the job in 2018, lasted much longer in the role than her predecessor. He cites that continuity for some of the city’s successes in modernizing the Finance Department.
“The city was a very different administrative operation prior to the charter change that created the full-time mayor,” Webber says.
The city’s hunt to find a new director is underway. Blair doesn’t have a target hiring date, but he notes the additional support from Deputy City Manager Layla Archuleta-Maestas to make the new hire has been invaluable.
“I call her the ‘gas pedal’ of this effort,” Blair says.
The path forward to restore confidence in the city’s management of public funds is clear, Blair and Bejarano say.
“The only thing that is going to give the citizens confidence or oversight agencies confidence is getting it done,” says Bejarano. “These things take time, they didn’t develop overnight and they’re not going to go away overnight.”