Former Claremont City Manager Glenn Southard was back in the news recently. Southard, who is now the city of Indio's City Manager, seem to have gotten into hot water over his and his staff's use of city-issued credit cards.
Two reporters for the Desert Sun, Erica Felci and Xochtil Pena, have covered the issue in a series of articles this month. According to the a January 4 Sun article, Indio's city staff spent around $805,000 on its credit cards in a two-year period beginning January, 2008. The Desert Sun article said:
A Desert Sun review of nearly 1,000 pages of credit card statements, however, shows that through October, the city's 62 cardholders spent at least $43,000 more than they had during the same period last year.
The newspaper's investigation also found:
- Tens of thousands of dollars in credit card bills were racked up monthly with charges to local restaurants, NFL and major league baseball teams — even a a women's clothing store. City administrators have repeatedly refused to explain the purpose of these charges.
- About one in five employees has a card. Records show the cards were issued to employees at all levels, including a front desk receptionist and the five members of the city's executive team.
- Statements are not seen regularly by City Council members. After reviewing The Desert Sun's findings, the mayor [Gene Gilbert] said he feels “blindsided” and believes some spending liberties were “abused.”
With Indio facing a current $5 million budget deficit, the Indio City Council took a lot of heat for the credit card expenses, which included the cost of a trip to Quebec for Southard's wife Gale, who accompanied Southard on an official trip. Southard claimed the matter was a mix-up. He had no defense, however, for the cost of a $15 airline baggage charge for Gale for a trip to Sacramento.
Mayor Gilbert's shock came as something of a surprise. Another Desert Sun article noted that in 2006, an accounting audit recommending a review of Indio's credit card policy:
In January 2006, city officials released an audit that showed 18 areas where accounting standards needed to be tightened. That included a notation that receipts were not always included with card statements, making it difficult for the city to determine if a charge was valid.
The following year, the auditor did not include any reportable conditions.
Still, the City Council in 2006 formed a subcommittee to review the issues raised in the audit — including Indio's credit card policy.
Councilwoman Melanie Fesmire was one of two council members on the subcommittee. Former councilman Mike Wilson, a frequent critic of the city's spending habits, was the other.
“2006. Wow. I can't remember doing it,” Fesmire told The Desert Sun last week. “I don't remember being on the committee. I don't remember the audit frankly. If we met, I assume we came out with a report. I don't recall any of it frankly.”
Wilson told The Desert Sun the subcommittee never met.
The Desert Sun also showed the credit card statements to former Indio City Manager Tom Ramirez:
Ramirez recently met with The Desert Sun to review the city's credit card statements, noting the documents contained “big red flags.”
“There is no way in hell they can justify buying Minnesota Viking tickets,” Ramirez said, pointing to a $1,156 charge in October 2008 on the card issued to assistant to the city manager Mark Wasserman. “Nobody at the top is setting the standard for performance. You're talking about taxpayer money.”
Naturally, Southard defended the credit card policy (or in this case non-policy) as the normal way of doing business.
So, once again, Southard creates a problem for a city council, and that council has to take the public heat. Southard's solution, as always, is to runaway. As part of their cost-cutting efforts, Southard and his staff have recommended offering golden handshakes to employees to get them off the payroll. Part of the deal includes giving employees who are over 50 and who have over 5 years of service (read: Glenn Southard) the option of buying up to two additional years of CalPERS retirement credit.
Southard, who has wrangled similar retirement options in his prior places of employment, has never missed chance to feather his nest. The Sun reported that Southard, who has worked for various cities for 36 years, actually has 40 retirement years.
Let's say that Southard can average 2.5% of his salary for each of those years (he gets 2.5% from Claremont and 2.7% from Indio but has also worked for San Clemente and West Covina*). And let's also assume that Southard buys the extra 2 years he is proposing for himself and the rest of his eligible employees. That would give Southard a yearly pension of 2.5% times 42 years, or 105% of his $300,000 annual salary (actually an average of his highest years of salary), along with yearly cost of living increases.
Southard has indicated that if the Indio City Council adopts the golden handshake to balance their budget, he may sacrifice himself by taking it. Southard, as always, is two steps ahead of the rubes he works for. He is turning a self-created crisis into a golden opportunity for himself.
All of this takes us back to Glenn's year in Claremont. Recall that he attacked then-councilmember Jackie McHenry because she questioned Southard's refusal to submit receipts for his reimbursed expenses. Then, he had a majority of the council on his side, so he could afford to take the offensive. This time, though, the Indio City Council is having to take a harder line because of the bad press they've gotten, and Southard is having to step more carefully.
Indio has already recalled most of its city-issued credit cards (though not Glenn's, we suspect), and there will likely be other reforms in the offing. We suggest one more. Go ahead with the golden handshake for all except senior management. It's worth it to eat the cost of firing him rather than rewarding Southard for his constant refusal to implement commonsense financial checks-and-balances.
It's worth it here to take a trip in the Insider Wayback to Claremont in January, 2005, when Southard staged a fight with former Councilmember McHenry in order distract the public from the questions McHenry was raising about Southard's receipts. Time just may be proving McHenry right.
For your viewing pleasure:
*CORRECTION: Southard actually worked for San Juan Capistrano, not San Clemente.