William Ktsanes speaks

Mr. Ktsanes is a new member of the Financial Advisory Board. Some may also remember his name as he ran for City Council last year. From watching the FAB meetings it seems Mr. Ktsanes has had difficulty obtaining the financial reports he feels he needs to see to understand the city’s financial situation. I have heard him request information in Excel documents and with a higher level of detail.

During the April 13th meeting the staff and Chair decided the best use of time was to have the City Clerk present for an hour on the Brown Act. Wasting time by doing it publicly rather than doing it just for members.

Mr. Ktsanes wrote a letter to the Finance Director which he shared with me and gave me permission to post. We thank him for having the courage to speak up!

Here it is

“Dear Mr. Rasiah,

First, as Brown Act concerns were raised in response to a similar email I sent last month, for the sake of full transparency and compliance, I am doing the following:

  1. Copying all of the City Council members, Financial Advisory Board (“FAB”) members, the City Manager, the City Finance Manager, the City’s legal counsel and several concerned community members on this email.
  2. Providing my consent that any and all of my emails to City Council members, FAB Board members, the City Manager and the City Finance Manager be posted publicly in whatever manner the City and its counsel may see fit. (If the City feels it is appropriate, I consent to posting this email as an attachment to the FAB meeting materials.)
  3. Asking that any response to my requests for financial reports and records be done so publicly, with the requested materials made available not just to FAB members but also to the City Council and general public.
  4. Requesting that there be no private responses to this email from City Council members, FAB Board members, the City Manager or the Finance Manager.
  5. Aside from my ongoing request for financial documentation, asking that any response  or discussion related to the items below be done publicly in tomorrow’s FAB meeting.

Ralph M. Brown Act (Government Code sections 54950-54963, aka the “Brown Act”)

I understand the COVID-19-necessitated shift from in-person to online meetings raises new challenges for complying with the Brown Act. I recognize there are concerns around what remains relatively uncharted territory. I absolutely welcome discussion of the Brown Act and related restrictions, particularly those that might impact online forums such the City’s committee and board meetings. Although I have read the Brown Act and various interpretations carefully, I welcome the opportunity to learn more and hear differing perspectives.

I am very concerned by what appears to many as efforts in some communities to use the Brown Act to discourage or limit public participation and engagement. It is not an issue unique to El Cerrito. However, any such obtrusion – whether by intention or not – is clearly neither the purpose nor in the spirit of the Act, which is to assure transparency and promote honest, ethical governance through an informed public. As described in the act,

The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created. (Gov’t Code § 54950)

Regarding the Brown Act, in tomorrow’s FAB meeting I will request the following:

  1. Rather than allotting 30 minutes in the FAB meeting for discussing the Brown Act with just ten minutes allotted to the monthly financials, I will ask that a separate meeting be set up for a thorough, in-depth, public discussion of the Brown Act with all City boards and commissions invited.
  2. To address any legal concerns, I will ask that the City’s legal counsel be present for any in-depth review and discussion of the Brown Act.
  3. I will ask that specific citations be provided whenever the Brown Act is used to justify limiting transparency, public requests and public engagement, all three of which are essential elements of good governance and the democratic process.

Financial Advisory Board Agenda

Thank you for assembling and distributing the agenda for Tuesday’s Financial Advisory Board meeting. While I understand we briefly discussed agenda items at the end of our last meeting a month ago, I would like the FAB and community be more involved in the process. With that in mind, in our meeting tomorrow I will ask for the following:

  1. Going forward, I will ask that a preliminary agenda be discussed and agreed upon at the end of each FAB meeting, as was done last month, but with the understanding there will be an opportunity to make changes and agree upon a final agenda as we get closer to the meeting date.
  2. I will ask that the community be provided opportunities to request updates, additions and changes to the preliminary agenda; and that their requests be considered and reviewed as the final agenda is set.
  3. I will ask that agenda items be solicited from the City Council, members of the community, FAB members, the City’s Finance Director and City Manager.
  4. I will ask that FAB agendas address all FAB-related requests from the City Council.
  5. I will ask that the FAB set the final meeting agenda collaboratively with the City’s finance director, perhaps with a targeted date one week in advance of the next scheduled FAB meeting.

Setting the final meeting agenda one week rather than one month before meetings allows for consideration of any new requests from the City Council; setting it collaboratively allows for greater public participation. Both are important.

Financial Advisory Board Membership

In February 2021 and, before that, in July 2020 the monthly Financial Advisory Board meetings were cancelled as they lacked the quorums required for decision-making. Several community members with strong interest in the City’s financial affairs and with significant financial expertise have expressed interest in joining the FAB. Many people—City Council members among them—have voiced concern that the FAB seemingly does so little. In our meeting tomorrow I will ask that the following either be addressed, or if deemed more appropriate, put onto the agenda of the next City Council meeting:

  1. I will recommend that the Financial Advisory Board membership be expanded from five to seven regular members.
  2. I will recommend adding one additional alternate FAB member who could vote should one of the regular members not be present.
    1. This would help ensure that future meetings are not cancelled if, for example, only two of five (or three of seven) members were present; having an alternate could assure that there is a quorum present and serve as a third (or fourth) vote.
  3. I will ask for guidance in identifying the steps necessary for these two changes.

Financial Advisory Board Meeting Structure

I joined the FAB believing it was an opportunity for residents of El Cerrito to constructively engage with and support the City Council in what is a particularly difficult financial period. You stated in the last FAB meeting that the Board’s roll is one of broad policy and not specific financial review, and that FAB members have neither the time nor desire to review detailed financial matters. I strongly disagree with both assertions. Additionally, City Council members have made it made abundantly clear that they would like a more engaged FAB that provides meaningful support and finance-related recommendations. To this end, I strongly believe the City should do more to involve the public in our work.

With this mind, in tomorrow’s FAB meeting I will ask for the following:

  1. I will ask that FAB meetings be recorded and made readily available to the general public.
  2. Regardless of whether the meeting is on WebEx or Zoom, I will ask that the chat function be enabled and community participation be encouraged. The reasons for enabling the chat function are varied:
    1. Anyone having difficulties raising their “hand” or being recognized can send a message indicating they are having problems.
    1. It provides an excellent, transparent, real-time opportunity for the public to provide comments, questions, observations and clarifications.
    1. It worked very well at last Saturday’s the “Concurrent Budget Townhall and Special City Council Meeting.”
  3. As requested last month, I will again ask for clarity about the procedures through which FAB recommendations are agreed upon and then conveyed to the City Council.
    1. How are recommendations proposed, drafted and voted upon?
    1. How can we make certain that City Council requests of FAB are on our agendas and addressed in our meetings?
      1. One recent example of this not happening is the City Council’s request for a wide and varied menu of choices from which the Council could draw upon to achieve an additional $1 million in cuts to the existing budget this fiscal year. This was requested first in February and then again in March, stated as something FAB could review but then never even brought up for discussion in FAB meetings. Nor was the menu of potential cuts ever presented to the Council. To be clear, the request was for a list of potential cuts from which the Council could construct varying scenarios and paths towards the $1 million reduction, hence the notion of a “menu” rather than a single list of staff reductions. Helping compile that menu of options seemed like a reasonable task for FAB, particularly if it was not going to be provided by City management.
  4. I will ask that we address concerns that the City Council is often left with the impression that the FAB is conducting financial reviews and analysis that, in fact, it is not doing.
    1. On several occasions, I have heard past and former Council members say “I thought that was something FAB reviewed” and express feelings of being misled.
    1. What FAB is reviewing and not reviewing needs to be made clear and conveyed honestly.

Recognizing Brown Act concern, I recommend the following:

  • I recommend FAB members not initiate or post to online meeting chat discussions (though they would certainly be free to read public questions and concerns posted through the chat function).
  • Rather than engaging in the online chats, I recommend that any response from FAB members to chat posts come through their verbal comments in the meeting.
  • I recommend that response from FAB members to anything included in the chats be done publicly, again, just as was done in Saturday’s Townhall and Council Meeting.
  • Regarding concerns expressed about disruption from the public (such as the extremely rare occurrences in which meetings have been “bombed”), I recommend that the meeting moderator be prepared to easily mute a disruption and prevent the sharing of screens.
  • Just as is done by FAB members and City’s Finance Director, I recommend allowing any community participant or observer to voluntarily turn their camera on and voluntarily post their name.
    • When people are speaking, this provides them the option of letting everyone know (or be reminded) who they are.
    • Many people, myself included, find it very helpful to know who is speaking, attending and participating in the FAB meetings.  
    • If anyone wishes to remain anonymous, that of course can be honored by their simply turning off their camera, not posting their name or dialing in remotely; Zoom and WebEx actually facilitate anonymity much more so than an in-person forum.
    • That some people choose to dial-in rather than join through Zoom or WebEx should not be used to limit public participation or justify opaqueness.

Financial Documentation

Among the stated purposes of the Financial Advisory Board are to “assist the City Council in making decisions on major expenditures and revenue sources” and “provide the City Council with recommended changes in financial practices.” As I have done every month since joining the FAB in December, I will again ask for more detailed financial reporting. Please note my requests are consistent with—and largely identical to—what was requested by Councilmembers Motoyama and Rudnick in the last City Council meeting.

Specifically, I will again ask for the following:

  1. Monthly financials be provided to the FAB and general public at least one week prior to each month’s meeting.
  2. Financials be provided in Excel format to facilitate their being spread and analyzed by anyone choosing to do so.
  3. Financial be presented in sufficient detail so that
    1. specific cost and revenue ledger entries can be identified,
    1. meaningful trends can be identified and analyzed,
    1. different scenario and sensitivity analyses can be constructed, and
    1. projected forecasts can be made that identify the impact and probability of alternative possible outcomes
  4. In response to the requests from Councilmembers Motoyama and Rudnick that monthly financials be presented in such a way to provide a more in-depth, period-by-period comparative analysis, I will ask that City management work collaboratively with FAB in determining how such reports might look.
    1. I have been told that City’s financial software was “propriety” and, as such, the detailed financial information and Excel documents I have requested could not be provided. If such is true, I will ask that the City consider adopting a software package or expanded license that permits adequate Council and Board access to data.

Auditor’s Report

Particularly given the initial resistance to even having the auditor’s report discussed by FAB, I am very appreciative and thank you for adding it to the agenda. Regarding the report, I ask the following:

  1. I ask that the Auditor’s Report be brought up to or near the top of the agenda, as the findings detailed in the Report and the City’s response to those findings are obviously a pressing concern for the City Council and general public).
  2. I will ask that FAB discuss the issue of budget overrides as highlighted by the audit.
  3. I will ask that FAB discuss the rationale for fund vs. departmental budgeting (or perhaps a combination of both), again, as highlighted by the audit.
  4. I will ask for clarity about the City’s Tax and Revenue Anticipation Note (“TRAN”) proceeds and Local Agency Investment Fund (“LAIF”) deposits/returns.
    1. On several occasions, I have heard you assert that the TRAN is profitable for the City, largely because it was sold at a premium above PAR and because the City earns more interest with its LAIF deposits than it pays in interest to TRAN investors. I believe the City pays 0.85% on the full TRAN and receives 0.4% on the partial LAIF deposits, less than half the TRAN cost. While I do not have sufficient financial documentation to precisely do the math, my instinct tells me that the premium paid by investors would not be enough to make up the difference between what the City pays and receives in interest. Debra Saunders, who has  much greater municipal finance experience and expertise than I, notes, “even if the whole TRAN was invested ALL YEAR they would earn less than $40k.” I believe this is still less than the borrowing costs, even when taking into account the premium-adjusted Note proceeds.
    1. Furthermore, because the TRAN is a tax-exempt security, if it was a net positive to the City, any “profit” earned would have to be forfeited to the IRS.
    1. One explanation may be that the interest you referred to as being earned by the LAIF was not on the TRAN deposits alone. Public clarification would be helpful.

Lastly, I would like to note that there were many finance-related questions posted during Saturday’s Concurrent Budget Townhall and Special City Council Meeting that the public was assured would be answered afterwards (as there was not sufficient time allotted to address most of the questions on Saturday). While the meeting minutes have been posted on the City’s website, the questions have not been answered—unless, of course, “Thank you for your comments” passes as an “answer.” Perhaps getting the finance questions answered could be an agenda item for the May FAB meeting.

I look forward to our meeting tomorrow and working together to provide the City Council with the input and advise they have requested.

Sincerely,

William Ktsanes”

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