Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Finance

“Here’s why three county unions are receiving generous raises”

From bethesdamagazine.com/bethesda-beat/ by Adam Pagnucco:

“County Executive Marc Elrich has given the county’s largest labor union its most generous contract in recent memory.  And he has paid for it with a one-time diversion from retiree health care money, leaving huge uncertainty on how his labor contracts will be funded in the future….MCGEO, the police union and the career firefighters all endorsed Elrich.  MCGEO additionally contributed $60,000 to the Progressive Maryland Liberation Alliance PAC, a mostly labor-funded super PAC which supported Elrich and opposed David Blair and Nancy Floreen.  Because Elrich was in public campaign financing, he could not accept a direct check from MCGEO….Elrich defeated Blair in the primary election by 77 votes.  MCGEO President Gino Renne told his shop stewards, ‘Marc Elrich won the primary thanks to our shoe leather.'”

 

 

 

 

Questions for meeting of March 20, 2019

Questions for meeting of March 20, 2019

Presentation:    “How we Plan to Govern in Montgomery County”

Speakers:  Council Member At-Large:

Gabe Albornoz, Member, Health and Human Services Committee, and Public Safety Committee

Will Jawando, Member, Planning, Housing and Economic Development Committee, and Education and Culture Committee

Following our meeting in January with new Council Members Evans and Friedson, here is an opportunity to meet with the other two new members. 

5 Questions sent to the speakers in advance of the meeting:

1. Bang Fraud – The investigation clearly showed the lack of internal controls at the Department for Economic Development.  The county government does not need another embezzlement of these proportions.  However, the County’s external audit contract does not provide for either testing of, or an opinion on, internal controls.  This is true for WSSC and MCPS audit contracts too.  Expanding the County’s external audit to include this opinion and additional testing would increase oversight of Department of Finance control activities.  It might uncover control risks in the numerous grants and contracts the County awards annually.  Would you support expanding the audit contract?

2.  Economic Development –  The Fuller Institute just reported that job growth in Montgomery (and Frederick) counties was significantly slower than DC and Northern Virginia.  In fact, over the last 5 years, DC and Northern Virginia have been creating jobs twice as fast as we have.  How do you measure the performance of the Montgomery County Economic Development Corporation and what are some of the ways in which we can compete with the success of the Fairfax County Economic Development Authority?  While we have some of the same assets as Fairfax County (education levels, highly-qualified personnel, good quality of life, good schools), why are we lagging in attracting businesses to the county?

3. Education and Health and Human Services Programs

The HHS committee controls hundreds of millions in spending to supplement the MCPS budget.  How does the committee coordinate the HHS strategic plan with MCPS planning efforts to close the achievement gap?  More spending has been planned for pre-K education which will serve a fraction of the estimated 30,000 economically disadvantaged pre-K kids.  Will the committee require rigorous academic performance measures to determine if the pre-K program has been successful 3-5 years from now?

The Council routinely approves the MCPS budget without linking spending to plans to close the achievement gap.  How would you change this?

The County Government, WSSC and the Maryland National Capital Parks and Planning Commission each have an Inspector General.  MCPS, the single largest component of the Montgomery County budget does not.  Would you support establishing an MCPS Inspector General?

4. Housing and Economic Development–  The PHED committee revised affordable housing policies a year ago to address the weak inventory which has been stagnant at 16,000 units since 2009.  The inventory is still not increasing as older MPDUs are removed as quickly as new ones are added.  In addition, our locally funded voucher program remains underfunded.   The committee also recommended a new economic development unit which is struggling to compete in our region.  How would you increase the inventory of affordable housing?

5. Public Safety– the 911 emergency response system is run by the County, and unlike the successful program in Fairfax, is slowly transitioning to rely on cell phone data for location response.  The aging system is subject to occasional breakdowns and outages, and accountability for performance is limited.  Would you support making this an independent entity to incentivize performance and reliability?   

“Three Ways To Reduce Maryland’s Pension Liabilities”

From the Maryland Public Policy Institute (MPPI) a study by Carol Park: ”On June 30, 2017, the 30-largest public pension funds in the United States, with combined assets of $2.65 trillion, reported a group median funded status of 75.32 percent. At that time, the Maryland State Retirement and Pension System (MSRPS), the 22nd-largest public pension fund in the country, reported a funded status of 69.4 percent. …The [MPPI] study identified three main problems underlying Maryland’s pension crisis: undervalued pension liability, underperforming investment, and inadequate cost sharing.”

The Bang Fraud and Internal Controls

The Bang Fraud and Internal Controls



Will the County Council learn from the $6.7 million fraud perpetrated on the taxpayers of the county?  We will find out when its Audit Committee members meet on March 14th.  Will the Council expand the scope of the current Clifton audit contract to include testing and rendering of an opinion on internal controls – the very vulnerability that caused the Bang fraud to flourish unchecked?

The last page of the auditor’s CAFR opinion letter for the FY’18 audit, makes it clear that their current testing is “not to provide an opinion on internal control over financial reporting…”  So no one is testing the controls set by the Department of Finance (the overseer of all things financial in the county government) because the County’s external auditors do not test these same internal controls to render an opinion.

In the wake of the Enron fiasco – and yes, we are not there yet – every publicly traded commercial organization now engages their outside auditors to provide an opinion on internal controls.  This in turn stimulates more robust internal assessments of controls by managers who own the controls called self-assessments.

MCPS and WSSC audits have the same deficiency.  The County needs to lead on this issue.  If not, the Bang fraud could lead to a bigger bang in the future.

There are other questions for which there are no answers:  Why did the background check of Bang, run by the County, not reveal his 2006 bankruptcy?  While Bang worked at the Department of Finance, what were his duties and fiscal responsibilities?  Has the county investigated any possible kickbacks on grants and contracts as a result of lax controls exhibited in the Bang case?  Why did the County and the Inspector General withhold vital public information until after the election and the Amazon decision?

Let not history repeat itself.

Joan Fidler and Gordie Brenne, President and Treasurer, Montgomery County Taxpayers league