SAN BERNARDINO—Taking its first tentative steps toward a semblance of normalcy upon its recently formulated exit from bankruptcy, the City of San Bernardino has lined up an experienced public agency financial issues professional to fill the role of finance director 13 months after the last person to hold that title was given an unceremonious boot out the door.
On Monday, the city council will vote to confirm city manager Mark Scott’s selection of Brent Mason, who has been the finance director in Riverside since 2010. The council’s okay is considered a foregone formality and the day after that vote, Mason is scheduled to go to work.
There are likely several factors in why the finance director’s slot with the county seat has been vacant for over a year and that Scott, who has been in place for just two months, waited until now to fill the position.
Long before Scott arrived on the scene, after years of dwindling revenues, expenditures drastically exceeding income, and deteriorating financial numbers that resulted in $80 million in unfunded liabilities and a $49 million annual operating deficit, San Bernardino in August 2012 filed for Chapter Nine bankruptcy protection.
Just prior to that filing, San Bernardino’s city manager, Charles McNeeley had bailed on the city. Andrea Travis-Miller, stepped in as McNeeley’s interim replacement. There ensued a sincere but prolonged and seemingly ineffectual effort to assess and define the depth and extent of the city’s financial implosion. But efforts by one municipal official after another to put their arms around the problem were met with frustration and failure. One issue was the completion of the city’s 2011-12 audit, followed up by 2012-13 audit. The city’s relationship with its auditing firm – Rogers, Anderson, Malody and Scott, which the city had long employed – deteriorated as Rogers, Anderson, Malody and Scott failed to deliver the audit. David Cain was brought in to serve as finance director in March 2013. He and Travis-Miller did all they could to extricate the audit from Rogers, Anderson, Malody and Scott but were unable to do so. It was not until June 2014 – three years late – that Rogers, Anderson, Malody and Scott at last delivered the 2011-12 audit. At that point the city ended its relationship with Rogers, Anderson, Malody and Scott, bringing in the auditing firm of Macias, Gini & O’Connell to complete the ongoing 2012-13 and 2013-14 audits.
Buckling under the strain municipal officials faced in attempting to right the city’s listing financial ship, Travis-Miller departed to become the executive director of the San Gabriel Valley Council of Governments, a regional joint powers planning agency in Los Angeles County, and Cain exited in September 2014, after 18 months in place.
The city hired Allen Parker, a journeyman city administrator with experience in and outside of California to take the helm as city manager. He brought in two deputy city managers, Bill Manis and Nita McKay, who were hired within weeks of one another in 2014. Manis was detailed to development issues and McKay to financial ones.
Despite the city’s transition to Macias, Gini & O’Connell, the 2012-13, the 2013-14 and the then the 2014-15 audits languished undone.
In December 2014, the city brought in Scott Williams, who had been the lead financial adviser for the Regional Governmental Services Authority in Napa and the finance director in Sonoma. Straightaway, Williams set to work on a financial discipline plan he calculated would tighten the city’s belt, reduce operating costs and create a modest savings in municipal budgetary operations so that a modicum of revenue could be diverted to making at least token payments to the city’s creditors who had been stiffed for so long. It was also expected that Williams would usher the auditing firm of Macias, Gini & O’Connell toward completing the several ongoing and overdue audits from previous years, as the data in those audits was a necessary component of the city’s bankruptcy exit strategy.
In March 2015 it was reported that the production of the audits was severely behind schedule. In a rather feeble stab at creating accountability over the unfolding debacle, the city fired Williams, who had been in place for just three months.
McKay blamed – some said scapegoated – Williams for the delay in the delivery of the audits. McKay indicated that Williams had somehow obstructed the delivery of the information the auditing firm needed to go over to make its report.
But Williams’ departure did nothing to ameliorate Macias, Gini & O’Connell’s failure to perform. Indeed, when the city submitted its tentative draft of its bankruptcy exit game plan – also known as a “plan of adjustment – to Federal Bankruptcy Judge Meredith Jury on May 30, 2015, those audits were not among the back-up material provided. Earlier this year, the city entered into its third arrangement within three years with a third auditing firm, the Pun Group, LLP, to complete that auditing work. It all came together last month, and city officials then collated everything and delivered – just two hours before the March 30 midnight deadline Judge Jury had imposed on the city March 30 – the ultimate plan of adjustment and attendant disclosure and noticing statements intended as the blueprint for the city’s alleviation of a major portion of its debt and other ongoing financial obligations. The plan of adjustment is intended to achieve a rough equivalency between the city’s income and expenditures so that it can make its exodus from bankruptcy.
McKay then abruptly announced her departure on March 31, leaving the same day.
Mason’s arrival comes just as San Bernardino is turning the page on Chapter 9, leaving him untainted by circumstances that undid a host of previous management and finance officials.
Mason, 50, is not a stranger to financial challenges in a municipal setting. He arrived in Riverside as a fresh-faced 29-year-old in 1994, and took on the assignment of city controller. Over the next sixteen years, he was buffeted by his share of exacting circumstances, which were topped with the sharp economic downturn that hit the nation, state and region in 2007 and persisted for five years, resulting in dwindling revenue to all governmental entities. In 2010, he stepped up to become finance director. Riverside, like San Bernardino is faced with a financial deficit, though not to the extent San Bernardino suffered prior to its Chapter 9 filing. For the fiscal year to end on June 30, Riverside is wrestling with an approximate $8 million gap between money coming in and expenditures.