Friday, February 23, 2007

Congratulations

Congratulations is in order; it's been reported that the city's bond rating has been recently upgraded a step to an A2.

The bond rating is predicated on a number of factors, and the rating system can seem a little mysterious. From the DOR website:

A credit rating assigned to a municipality to help investors assess the future ability, legal obligation, and willingness of the municipality (bond issuer) to make timely debt service payments. Stated otherwise, a rating helps prospective investors determine the level of risk associated with a given fixed-income investment. Rating agencies such as Moody's and Standard and Poors use rating systems, which designate a letter or a combination of letters and numerals where AAA is the highest rating and C1 is a very low rating.

Just for historical perspective, this is Everett's bond rating for the last 12 years:

1995: A
1996: A
1997: A
1998: A3
1999: A3
2000: A2
2001: A2
2002: A1
2003: A1
2004: A2
2005: A3
2006: A3
2007: A2

These are all "A" level bonds, and Everett should be pretty proud of its financial record. Medford, Saugus, Somerville, Malden and Melrose have A level bond ratings. Revere is at B level.

The DOR had this to say about A level bonds:

Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future.

Sunday, February 18, 2007

The Great Audit Debate

While we await the release of the final "forensic" audit report that was commissioned by the Mayor's Office -- at a cost of $60,000 to the taxpayers -- the Mayor has appeared before both the Common Council and the Board of Aldermen to answer questions regarding its contents and when the report will be released.

The Mayor's appearances presented more questions than they answered; his claim that he has received a draft copy of the audit report has raised more than a few eyebrows. Why would this company not just submit a final report of their findings? Why would something like an audit be submitted in a draft form for review?

Well, at the Common Council meeting, the Mayor said he had read halfway through it and had found one typo and said that was the only thing he changed; at the Board of Aldermen meeting, he said that no changes would be made to the draft report and that there would be a "pristine" copy of the draft (with no notes and no markings on it) available along with the final copy of the report. That brings us back to the question . . . if no changes are going to be made to a draft copy, why is a draft copy necessary?

The Mayor then claimed that after he had read through the draft copy, there are portions of it he didn't understand; he said he needed to meet with representatives of Melanson & Heath, the firm that conducted the audit, to ask them to clarify certain points in the audit because, the Mayor contends, if he can't understand it, the "average person" isn't going to understand it, either. Let's overlook that particular insult to the intelligence of, well, the vast majority of us and go to the next question; does the Mayor not have a staff that can look at this audit and explain any questions that the Mayor may have? Again, why the need for a draft? Why not review the final copy, get your questions answered by the firm and your own staff, and be prepared to answer questions based on the final report? The city employs an entire legal department, an auditor, an auditing consultant, a budget director, and a city treasurer. Surely these people are qualified to interpret the findings of a final audit report. Aren't they?

The Mayor was also questioned by Alderman DiPerri regarding his claim that the initial presentation of the audit results would be presented in Executive Committee; the Mayor backpeddled from that, saying that he had been advised by "his people" that once the final signed report was received, it is a public document; there will be no discussion in Executive Session. This is a 180 degree turn from what he told the Common Council, which was that he was advised that until the Inspector General had reviewed and weighed in on the report, it could not be discussed publicly, hence the need for Executive Session, because there were people named in the report and there was a potential for legal action as a result of the audit findings. Huh? What changed in the week between his appearance before the Common Council and the appearance before the Board of Aldermen. Is it possible that Mayor Hanlon, who was the City Clerk for 20 years, managing the office responsible for many public documents, had to be "advised" what a public document is?

So many questions -- before the audit is even released. The Mayor said that the firm focused on five departments. Which departments were they? Why did no one on the Board ask that question? For that matter, does anyone know the content of the original request? When the Administration contracted with Melanson & Heath, what exactly was the scope of the request? The Mayor claims they were contracted to do an audit of the entire city, but Melanson & Heath came back and said that they were going to focus only on five departments. Why? Why would a firm that has been contracted for specific services be able to alter the scope of the investigation?

No doubt there will be many more questions when the audit, and the questionable draft copy, are released for public consumption. In the meantime, the Mayor has tangled himself up in a web of contradictions from which he may have difficulty extricating himself and his administration.