FW still reconciling past bond programs
A culture of allowing accounting delays over the last three decades has so far led to the loss of $1.7 million from Fort Worth coffers to cover bond program shortfalls.
City officials made the discovery while completing accounting efforts that need to be done before the city implements a new business management software program this fall — a finding the mayor said “shocked” her.
But as city staff scrambles to close the books on those “unbalanced” and “inactive” projects by Sept. 1, that funding shortfall could grow, the City Council has been told.
“It’s important we close out these projects very quickly,” said Assistant City Manager Fernando Costa. “This is something the city should have been doing routinely. It became part of the culture. It was easy to put it off to another day.”
Costa said, “It was not a good practice. It’s never been an urgent matter for city staff. It should be, and going forward it will be.”
Since Feb. 1, a team of employees has worked to account for bond program dollars, matching up what was spent to the revenue stream. In some cases, projects didn’t cost as much and ended up with a positive balance, but others ended with a negative balance. Money was moved internally between the projects to balance what they could.
There isn’t enough money to move around, however.
“I was shocked, truth be known,” Mayor Betsy Price said. “When I first saw this I was horrified because I could just picture that we would have millions here that we would have to find to fund. We still don’t know what’s out there.”
“For four years, I’ve worked on open government and transparency,” Price said. “I intend for this process to be very clear to our citizens. If we come up $2 million or $4 million short, I’m going to tell [citizens] where it came from, why it’s there and what we’re going to have do to address it. I will admit, this makes me nervous until we get to the bottom of it.”
For now, three administrative fund transfers totaling just under $1.7 million from the contract street maintenance fund within the Transportation and Public Works Department have been made to cover the shortfalls, Costa said.
The transfers, Costa said, have caused “no delays” in the city’s street maintenance work.
The Finance Department will ask the City Council on Sept. 29 to replenish the street maintenance fund from another source, although what that source is has not been determined, Costa said.
Council members learned recently that the city had an “unbalanced projects list” of 982 projects. That was reduced to 417 projects, or by 58 percent, by early July, according to a city report. Also, staff started out with an “inactive projects list” of about 594 projects and reduced it by 72 percent, to 165, in early July.
Voters have approved, and the city has sold, $1.47 billion in bonds or certificates of obligation for capital improvement projects in the last 30 years, nearly the size of the city’s annual budget.
City Manager David Cooke said the issue came to light when city staffers began working toward implementing the second phase of enterprise resource planning, a business management software for accounting and finance that is scheduled to go live Oct. 1. The first phase of enterprise resource planning was done in 2011 to handle the city’s human resources and payroll functions.
Staff members also saw the large number of open projects on the books when they began gathering data for capital improvement planning, he said.
“You always close out a project as soon as the warranty period is over, so there’s really no reason to have a project open a year after it’s been completed,” Cooke said.
Going forward, a more formal process with annual accounting measures will be in place within the ERP, Cooke said.
The city is still dealing with lingering projects from funded bond programs from years ago, including 11 road and bridge projects approved in the 2004 and 2008 bond elections. Of those, eight are now under construction. The remaining three will go under construction next year and will be built by the Texas Department of Transportation.
Several small park projects all under $1 million haven’t been completed, as well as four major park projects. One of those, $4.5 million of improvements to Gateway Park, is now under construction and includes $644,723 from the 1978 bond program. And a little more than $1.2 million in improvements to Forest Park are underway, which includes $309,732 from the 1998 bond program.
Design work has started on the $6 million Victory Forest Recreation Center at Hemphill and Biddison streets, which is funded with certificates of obligation issued in 2000 and 2013, the 2004 and 2014 bond programs, and park dedication fees.
Projects approved in the May 2014, $292 million bond program also have been slow to start and not at the rate promised citizens. That’s happened, in part, because of the unusually rainy spring, and the shortage of construction workers and rising construction prices, an industry-wide problem since the Great Recession, Costa said.
In 2013-14, the city planned to spend $3.9 million of the bond program, but only spent $800,000. In 2014-15, plans were to spend $53.4 million, but only spent $32.6 million and another $10 million has encumbrances, falling $10 million short. The City Council vowed to complete the 2014 bond program in five years.
“We can’t go back on our promises on our bond elections. We intend to deliver just like we said,” Price said. “We’ve got much better accounting methods and are much more transparent. We want the citizens to be comfortable that we’re spending their dollars right.”
Sandra Baker, 817-390-7727