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Deborah Edgerly and The Larae Brown Issue - Fired City Controller

Sf Chroncle's scribe and my cantankerous friend Chip Johnson wrote an article that saw the light of day, and then was forgotten -- until now. It involves Larae Brown, who was a Controller with the City of Oakland and according to Johnson, doing her job, which was finding flaws in bookkeeping.

Seems she found a huge one: Chip Johnson reports:

The trouble began in 2006 when Brown completed a reconciliation of more than 100 city bank accounts, a task she alleges had not been performed since 1999 - and what she found was extremely troubling.
In her review, she discovered the city's cash balance was overstated by $172 million and 77 of 111 city accounts showed negative fund balances. By her estimates, all that was left in city coffers were bond funds, whose use is restricted by state law.
When she raised concerns with her superiors, the suit claims, she was told that City Administrator Deborah Edgerly had devised a 10-year repayment plan to cover a half-dozen negative fund balances. Brown claims she also discovered the city had commingled bond funds with various city general business funds, which also constitutes a serious violation of a public employee's fiduciary responsibilities.
Edgerly denied Brown's version of the accounts and said the lawsuit is without merit, said Karen Boyd, a spokeswoman in the city administrator's office. Boyd pointed to the outstanding credit rating the city recently received from both Moody's and Standard & Poor's, two of the nation's largest bond-rating concerns.


Now, I have to tell you the matter of the "outstanding credit rating" is in itself political.

I know because I've attended meetings of the City Staff, elected officials, and bond counsel for the City of Oakland and for the rating agencies. I did this while I was employed by Elihu Harris as Economic Advisor between 1995 and 1999. The meetings with the rating agencies are seldom contentious. Indeed, they're quite nice conversations. The rating agency wants to see that the City pays its bills. It's not in the habit of down-grading the organization for "creative financing" techniques. How do you think Vallejo could emerge from bankruptcy in 2004, and then get an "A" credit rating in 2005, then fall into the state of filing another Chapter 9 this year?

The rating agencies aren't into doing projections and they don't want to throw your city under the bus. Why? Because it's in their best interest to have a good relationship with issuers, like the City of Oakland. They make money from issue volume, so they want more and more bonds.

So Karen Boyd's statement about Oakland's good credit rating is just that: a statement.

If what Chip wrote is true, Oakland's in some trouble. I discovered and wrote about this while in the process of trying to determine a pattern of media coverage of Deborah Edgerly as CAO. I was all set to report sexism and racism in the media, and got this story instead, and not much of the other view that I expected to see.

While I do like and stand by Miss E, she's got to give me more good material to find and report. Otherwise, I've got to step back.

I think it's time the City had an overall review of how it is ran, from the City Charter to the Oakland / Alameda County Coliseum. It's time for another "Oakland Sharing The Vision", only this one with more bite.

What's "Oakland Sharing The Vision"?

Stay tuned.
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