December 01, 2015 News & Features » Cover Story


The Frustrating, Depressing, Embarrassing Story Behind Richmond City Hall’s Mind-Numbing Financial Mayhem 

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Richmond’s hopes of sorting out its extraordinary financial mess rest with a small-boned, soft-spoken woman in a navy blue suit, standing before about 40 people during a meeting at Albert Hill Middle School in the Museum District.

“It is hard to change what has happened in the past,” says Selena Cuffee-Glenn, who’s been Richmond’s chief administrative officer since being recruited from her job as Suffolk’s city manager earlier this year. “I believe in competencies in staff. I believe in efficiencies.”

She faces a huge task. Since 2011, the city’s ability to track revenues and payouts has been badly flawed. For the past three years, Richmond has been late in filing its required annual financial statement with the state auditor of public accounts. It’s working without a net for such city entities as Richmond Public Schools, where operations and planning are underway without crucial data.

As much as $3 billion allegedly has been paid out under flimsy controls from 2013 to 2014, with some vendors receiving duplicate payments, according to City Auditor Umesh Dalal, who is requesting yet another forensic audit by outside accountants.

Making matters worse is the extraordinary turnover in upper staff that occurred after Mayor Dwight C. Jones was re-elected in 2013. The revolving door has hurt several city entities, but the Finance Department has had it the worst. Now on its third leadership team since 2012, the department has lost seven top officials. One lasted six weeks before resigning under a cloud. Insiders say that Richmond City Hall is regarded as a joke by members of an association of municipal financial officials in the state.

The ultimate responsibility for the problems rests with Jones, who succeeded L. Douglas Wilder as mayor in 2009. For years, Richmond was run in a traditional way with a strong city manager and a mayor elected by City Council. That changed in 2004 in an attempt to make a strong, directly elected mayor the city’s chief executive.

Yet Jones, a former legislator and church pastor, has no operational experience running an organization the size of City Hall, or with nearly as many employees. The shortcoming has become so apparent that former Mayor Wilder took the unprecedented step of ripping Jones in a Sunday newspaper opinion piece, published in The Richmond Times-Dispatch on Nov. 15. In it, Wilder writes that Jones is taking his job “back to the previous ceremonial-mayor form of government.”

Wilder could not be reached by Style for comment. Jones declined an in-person interview and answered questions through staff members.

What Jones lacks as a manager, he seems to more than make up as a figurehead. He is taking bows for a number of positive developments. After years of flight, people are moving back into the city, especially to redeveloped neighborhoods such as Scott’s Addition and Manchester. A renaissance in arts and restaurants is generating national praise. While not an apparent financial success, the UCI Road World Championships in September won Richmond precious and positive buzz across the globe.

But that’s Richmond’s outside face. Inside, pandemonium still is evident while high-profile officials continue to leave. The latest was Revenue Administrator Sharon McDonald in October, who was regarded as a competent tax collector. The city is still struggling to correct lingering problems with its database.

On Oct. 5, the new financial team led by Cuffee-Glenn and Finance Director Leonora Reid finally submitted a mandatory Comprehensive Annual Financial Report, known as the CAFR, for 2014 — which was due Nov. 30, 2014. Cuffee-Glenn and Reid say that they are heartened that the top three bond rating agencies have affirmed the city’s creditworthiness.

But that’s the third year in a row that Richmond has been late with required annual reports, a situation that Martha Mavredes, Virginia auditor of public accounts, has said is “unprecedented” for a city Richmond’s size.

What’s more, Richmond still has not filed another form required in 2014 that facilities data transmittal, according to Rachel Reamy, the state auditor’s local government specialist. Reamy says she doesn’t know if Richmond will make its Nov. 30 deadline for the 2015 comprehensive report required by Virginia’s 171 municipalities.

A bigger question is whether Cuffee-Glenn and Reid can make needed, permanent reforms within the Finance Department. There are plenty of errors to remedy, especially when Jones’ team took charge the second time and began a slew of bad hires.

“They went outside the city,” Richmond political analyst Bob Holsworth says. “They brought in people without experience.”


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The city’s deeply-entrenched financial problems go back to one issue: the botched installation of a routine database upgrade.

Called RAPIDS, which stands for Real Time Automated Personnel Identification System, the $18 million database was to have its first part, involving human resources, payroll and retirement, completed by February 2012. The second phase, dealing with compiling financials and crunching out reports, was due July 2013.

Richmond is one of many municipalities across the country that has worked to switch or upgrade its back-office data functions during the past decade as better hardware and software have become available. Richmond had an adequate database called Advantage, but it was becoming outdated.

One of the leading systems chosen by municipalities is the Oracle e-Business Suite, which the Silicon Valley-based company started developing in the 1980s.

“It’s very popular,” says Tom Owdon, information technology director at Henrico County, which also chose the Oracle system for its database upgrades that stretch from 2002 to 2012.

Richmond also found Oracle to be a good option. To help install the system, it hired Strategic Information Systems Group, a company based in the Chicago suburbs. Company officials did not return telephone calls or emails from Style, and the city says it is no longer working with them.

With plans consolidating around the Oracle system in Richmond, bad luck and bad management were coming together. Talented staff members started to leave. Replacements faced usual learning curves with their new jobs and also had to struggle with what would be seemingly insurmountable problems with the city’s key data system. Crucial data wasn’t being crunched and delivered.

Interviews with a number of current and former employees and council members place the beginning of the problems in 2010.

“It all goes back to when Marcus Jones left,” says City Councilman Jon Baliles, a former city planning official.

Jones was the city’s highly regarded finance director and deputy chief administrative officer, who left in 2010 to become the city manager of Norfolk. He’d been in Richmond a year, and the Norfolk position was a big promotion.

Barbara Reese became Richmond’s finance director but left in 2011. Her position was vacant until May 13, 2013, when Dominic Ochei was hired as finance director.

But Ochei lasted only six weeks before resigning. His left amid accusations that he didn’t tell city job recruiters of his involvement with an alleged fraud scheme in South Africa, and that he and his wife were involved in a bankruptcy when they were living in Georgia 20 years before.

By then, much of the oversight of city finances was being handled by Sharon Judkins, who worked for the city from 1980 until 2000 and later for a water authority in Northern California. In November 2011, she applied to be Richmond’s deputy chief administrative officer for finance and administration and won the job, which paid $163,000. She started on March 26, 2012 — just when the personnel-system mess was unfolding.

“She was working 18-hour days,” says her lawyer, Verbena M. Askew.

The problems started to become overwhelming as well as apparent. City Auditor Dalal wanted to audit the Finance Department as early as October 2011, but has said that foot-dragging by the Jones administration pushed the audit back to August 2012. Afterward, Jones’ people, led by Chief Administrative Office Byron Marshall, wanted the audit postponed. Dalal refused.

There apparently were good reasons why the Jones administration was shunning attention. An audit report issued by Dalal on Dec. 16, 2013, showed that a multitude of mistakes and miscues was why RAPIDS was becoming a cybernetic disaster.

Some of the problems were breathtakingly simple, Dalal found. For one, city employees who needed to learn how to operate the personnel system weren’t showing up at meetings.

Employees “felt they received minimal value for attending these meetings,” Dalal reported, “as the information provided was mostly a promotion of the system’s benefit.”

When officials implemented ways to answer questions about the system, no questions were being asked. A website was created to help, but the information it provided was out of date, according to Dalal’s audit. The level of training was too basic to be useful. Taken together, he concluded, these issues “may not represent an adequate return for the City’s more than $18 million investment.”

Asked about the instruction problems, Tammy Hawley, press secretary for Jones, writes that “the people who were in charge of RAPIDS in 2013 are no longer with the City. Employees are now receiving the necessary training.”

Judkins was especially stung by Dalal’s devastating conclusions. By then, the Comprehensive Annual Financial Report required from municipalities every Nov. 30 by the Virginia Department of Accounts started to fall behind. Bills, data needed by schools and other issues related to the flawed system implementation started to crop up.

Officials at Cherry Bekaert, then the city’s outside auditor, were growing frustrated. They complained about a tardy financial report that should have been filed in November 2013, saying: “The Finance Department currently lacks the technical critical mass to effectively and efficiently prepare the report.”

Judkins’ days were numbered. According to a lawsuit she later filed against Dalal, the chief administrative officer, Marshall, informed her on April 22, 2014, “that her employment was no longer required by the city.” and that Jones had given him the résumés of two candidates to replace her slot and another in the city.

More issues flared up when it was revealed that Marshall had authorized 807.70 hours of sick leave pay to Judkins, worth about $408,000, which included her time with the city dating before 2000.

Dalal pounced. He said that some of Judkins’ miscalculated pay was done by “an untrained Finance Department employee who was not supervised properly,” and suggested that a criminal probe examine her pay situation.” After being asked to investigate, the city commonwealth’s attorney said he found no evidence of criminal wrongdoing.

Judkins then sued Dalal on July 28, 2014. Her lawyer produced a psychological counselor in court who said that Judkins’ experience with the city was so horrific that she suffers from Post Traumatic Stress Disorder, or PSTD, a debilitating ailment usually associated with soldiers in combat.

Marshall abruptly left his job as chief administrative officer on Sept, 14, 2014, with no explanation — another victim of the tumult of the Jones administration.


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The problems with the personnel system continued unabated. The next step by Jones and his chief policy adviser David Hicks, who now serves as a general district court judge, was to bring in some professional and uncontroversial ringers with long experience in municipal finance.

One hire was Norman D. Butts Jr., the finance director of Leesburg, a city in the sprawling and fast-growing suburbs of Washington. He was appointed to the same job held by Judkins. Another ringer was Paul Jez, who handled finances at Virginia Commonwealth University for 20 years. Rounding out the team were City Controller Leon Glaster and Chief of Revenue Administration Sharon McDonald, who worked in tax collections for the city of Norfolk.

But the new team was coming in under a cloud.

“You’d go to a meeting at [the Virginia Government Financial Officer’s Association],” said one former city official who asked not to be identified, “and if you said you were interested in Richmond, you’d be asked if you were crazy. It is a revolving door.”

The group found the personnel system just as much of a quagmire as everyone else. Officials spent a year trying to catch up on annual financial reports using a partially installed system that barely worked. Because of it, there was no time to develop and implement the internal reforms that the Finance Department badly needed.

Soon, Cherry Bekaert’s words would become prophetic. The city Finance Department was a high risk and highly dysfunctional entity that has “continually gotten worse every year.”

With that epithet, Cherry Bekaert dumped Richmond as its customer — an extremely rare occurrence in the world of municipal government, where accounting firms compete aggressively for public contracts. The city now uses Grant Thornton as its outside auditor.

One challenge is that Oracle E-Business Suite has a module that can be troublesome. It’s called the projects and grants module, and is designed to collect, collate and dispense data about various projects. It also tracks various local, state and federal grants and is one of 14 Oracle modules the city chose to buy and install.

“A projects and grants module was not implemented properly,” city spokeswoman Hawley writes to Style.

Coincidentally, Henrico and Chesterfield counties were undergoing major upgrades to their databases at roughly the same time as Richmond. But they report no serious problems. That’s especially striking because both counties each have 30 percent more residents than Richmond.

Another factor could be that they both have a strong county executive style of control and a more professional way of operating.

“The counties have developed a strong bench where experienced people move up the ladder,” a former Richmond official says. “In Richmond, you might have three different bosses in a year. Nobody knows what’s going on and there’s no institutional memory.”

Installing databases may underline that point. In 2002, Henrico decided to install the same Oracle E-Business Suite database that Richmond later bought. According to Owdon of Henrico County’s Information Technology Department, the first phase went from June 2002 to July 2005 and cost $5.7 million. For this initial phase, which involved crunching financial numbers, Henrico used SIS Group, the same consultant that Richmond used. There was no problem with SIS Group, he says: “They fulfilled their contract.”

From 2006 to 2009, Henrico installed a second phase of Oracle to cover human resource management, costing $8.9 million, with another upgrade in 2012. Owdon says there were no serious problems with that either.

But there is one telling difference: Henrico chose not to install the Oracle projects and grants module that gave Richmond so much trouble. “With the E-Business suite you can pick and choose what you want,” Owdon says, noting that county officials didn’t feel they needed projects and grants.

Chesterfield County also was upgrading its IT system but went with one designed by Sungard, another popular back-office system-maker. The first phases of the $12.9 million system went live Aug. 1, 2008, and involved financial reporting, according to Patsy Brown, director of accounts. Another phase, which involved payroll, went in on Jan. 1, 2010. Another upgrade costing $465,000 was installed in October 2012.

The county’s system is designed so that every government outlet, such as schools, can use it. Installing the system took time and effort but the disruption was minimal. “In one case,” Brown says, “we were down for two business days and a weekend, but that was about it.”

Back on Broad Street, the Dream Team was falling apart. In April 2015, fears of a drop in the city’s credit rating were growing. Richmond was spending more than $295,000 for Governmental Internal Control Solutions, a Nevada consulting company, for emergency help in straightening out the tardy 2014 annual financial report. One of its executives was reported as saying he was working from five to seven days a week on the task.

Butts repeatedly told City Council that running finance was much more difficult than he thought. He was forced to spend too much time trying to fix personnel system while playing catch-up on what was left undone in filing the city’s financial report with the state.

Butts’ resignation was announced June 14. Reached at his home in Montgomery County, Maryland, he declines to comment. Jez, who also quit, could not be reached.

“You had two old pros who had pensions to fall back on,” analyst Holsworth says. “They saw what was going on in City Hall and asked, ‘Why bother?’”


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Sitting in a small conference room on the second floor of City Hall, Cuffee-Glenn and Reid go over their plans to fix the Finance Department’s problems, file late reports and, once and for all, solve the RAPIDS issues, which, incredibly, still dog the city.

A Chesapeake native, Cuffee-Glenn earned bachelor’s and master’s of planning degrees from the University of Virginia. She worked at the Richmond Redevelopment and Housing Authority and taught at Virginia Commonwealth University.

Reid, from Williamsburg, is a certified public accountant who has worked in city government in Portsmouth and in Washington.

They ended up working together in Suffolk where Cuffee-Glenn was hired in 2005 and became city manager in 2008. She faced many problems, including a downgrade in the city’s credit rating, damage from an F-3 tornado, the loss of a major military installation and the downturn in the real estate market. She says during her time in Suffolk, she saw five finance directors leave.

“Change is a normal thing,” she says. “Sometimes you have to make sure the right people are there for the people.”

Cuffee-Glenn restored Suffolk’s reputation with bond rating agencies and impressed Jones, who hired her. Reid, who served as Suffolk’s finance director, followed.

Now the third management team since the RAPIDS debacle, they’re trying to resolve the system’s problems. Reid says that one of her biggest chores is making certain that standard operating procedures are carried out. There are still problems because some of the city’s finances are on the old database. Other managers had failed to make sure that testing inputs into the new system was done properly. So, as Reid puts it, “you really can’t verify data coming out.”

Cuffee-Glenn says she’s taken more steps to straighten out the department. Noting the city auditor’s complaint that city workers weren’t attending meetings about the personnel system, she says, “They are showing up now.”

Their biggest accomplishment is finishing the 2014 accounting report that was 10 months late. They knocked it out three months after Reid arrived. Now they’re working on the 2015 report and getting still-tardy reports together.

A big fear was keeping ratings agencies, including Moody’s Investors Services, Fitch Ratings and Standard & Poor’s, on board. After Jones took office in 2009, the city got one, incremental upgrade from the agencies, followed by four more in 2010 and then another in 2013.

Starting this summer, worried city officials held regular discussions with the ratings agencies, noting that reforms are underway and that Richmond has plenty of revenue to be fiscally healthy. They’ve also asked for Henrico’s help in straightening out RAPIDS.

Some good news came in October when the three ratings agencies affirmed Richmond’s near-top-drawer credit rating for its general obligation bonds. Standard & Poor’s praised the city for its “very strong management that has been implemented, strengthened, and continues to implement, strong fiscal policies and practices.”

Yet the relevance of the positive reviews isn’t clear.

Moody’s Investors Service, another Wall Street ratings firm, gave the city AA2 ratings in 2012, 2013 and in 2014 during the height of the internal fiscal crisis. In November 2014, when the city was late with its financial report and on its second fiscal team, Moody’s praised the city’s “long-term stability” and its “satisfactory financial operations characterized by conservative budgeting and manageable debt position.”

The goal now is to finish reports and finally work out the bugs in the personnel system. One problem is that auditor Dalal is pressing for a forensic audit of city finances because of irregularities he’s detected in 2013 and 2014. He says that some $3 billion in payouts are in question. That leaves Cuffee-Glenn and Reid scratching their heads, because the city’s annual budget is only about $700 million.

The new team is Jones’ last hope to erase the darkest mark on his record. Not everyone is confident the newcomers will be able to solve the problems. As one former official says, “the short answer is no.” S



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