Opaque transparency: the unexamined financial state of Galesburg

by Mike Kroll

The 2007 fiscal year for the City of Galesburg was a financially and politically turbulent year. Not only did we see a new city manager (Dane Bragg) assume command and three new aldermen defeat three of four incumbents in last April's municipal election but we also saw Bragg and the new city council repair the 2007 budget they inherited and struggle through development of the current 2008 city budget. Meanwhile the local Galesburg area economy limped along reflecting an advanced peek at the then-upcoming national economic crisis we the U.S. Is currently experiencing.

In July of last year I wrote a story that explained how the doom and gloom descriptions of the city's financial picture were exaggerated based on the Galesburg Comprehensive Annual Financial Report for 2006 that was released more than six months into 2007. In the opening paragraph of that story I wrote: “Despite fear to the contrary Galesburg's total revenues were actually up in 2006 by $436,000 over 2005 revenues and while city expenses were also higher by $791,000 income still exceeded expenses by $1.95 million. When you have a income surplus of nearly seven percent over expenses that is hardly bleak financial news.”

Whereas Illinois law requires such a financial report be completed and made public within six months of the close of the city's fiscal year last year's was a week late but this should be no surprise as the Galesburg finance department that has a history of holding city financial data tight to the vest, even from aldermen themselves who request such data. Again from that July 5, 2007 article: “...[T]his seemingly great news has been all but buried by city officials who apparently find it better to preach doom and gloom than to be forthright about the city's finances. Obtaining financial data from the city finance department is next to impossible for mere citizens but — even more surprising — is that elected officials like aldermen are provided no more financial information than finance director Gloria Osborn is forced to provide.”

The Zephyr has had little historical success in requesting city financial data that should be available to the public but when newly elected aldermen Russ Fleming and Mike Lummis began asking for monthly financial summaries for the city following discussion prompted by my article last July they too were not encouraged by the response from Bragg that such a report would probably not be practical. Osborn has always hidden behind the same excuse, she dose not want to provide financial data that had not been audited by the city's accounts. In essence this means that the annual report, six months after the close of the fiscal year, is just about the only financial reporting Osborn feels comfortable providing.

When it became clear that some of the aldermen weren't buying the excuses Bragg promised to provide quarterly financial presentations, and has done so. These presentations are carefully crafted to look pretty and present very little detail yet they appear to have satisfied most of the city council. But Fleming remains unconvinced and disappointed in the lack of financial information that is made available. “When I asked for monthly reports I was expecting to receive printed reports laying out financial data in a format that would permit council members or the public to evaluate the city's financial status for themselves. I thought we could get enough to permit us to build our own spreadsheet but these presentations are far to incomplete to permit any level of such analysis.”

Fleming is convinced that city administration is unwilling to make a more complete picture of the city finances available but he is not sure if this is just Osborn or if it is with the direction or acquiescence of Bragg as well. “As an alderman I shouldn't be able to modify the city's financial data but I should be able to at least see it and in a format this is useful. I wish my fellow aldermen shared my curiosity and would join me in demanding better access to the city financial data but I myself can be faulted for settling for what little data they provide in the face of so little council support.”

Before the end of 2007 I personally spoke with Bragg about the Zephyr's interest in doing a detailed story on the end of year financial status of the city and he assured me that the city would be happy to accommodate us. What we had in mind was a summary of the state of the many city funds at year-end as compared to the previous year along with comparison of projected expenses and revenues beside actual expenses and revenues.

While I was willing to patiently wait for this information Zephyr editor Norm Winick, apparently less naïve than I, and submitted a freedom of information request for this financial data in mid-January only to have Osborn deny that request (as well as two subsequent official FOIA requests). Each request elicited the same response from Osborn. “...[S]ince the City uses modified accrual accounting, the balance sheet and fund balance report has not been completed for fiscal year 2007 since we are still waiting for information on both revenues and expenditures that pertain to fiscal year 2007. Providing you with the requested information at this point would require us to provide you with inaccurate information since the account balance amounts will changes when we receive the additional information.”

It was explained to Osborne that we would include any qualifying statement she wished to provide attesting to the preliminary nature of the data presented to no avail. In March after we had received the third rejection of our written request I spoke with Galesburg City Clerk Anita Carlton (in her capacity as city FOIA officer) about the procedure for lodging a formal complaint that Osborn was violating the Illinois Freedom of Information Act. I also informed Bragg that we were about to file the complaint and most probably follow up with the Illinois Attorney General's office. He told me that the necessary budget adjustments were almost complete and that the data we requested would be available before the end of March. March ended without our receiving the financial data but we were told that it would be provided during the first week of April..

We finally received our financial data from Osborn last week, 67 printed pages in total, listing General Leger balances line-by-line across the many various funds. We were buried in nearly useless data. What the report doesn't show are the annual summary data we requested. For example, we now know that the Sales Tax Receivable account stood at $815,460 at fiscal year-end but not the total of Sales Tax Revenue in 2007. Ditto for every other revenue or liability line. A line-item snapshot by itself without the context of summarized income or expenses as compared to budgeted or historical data is essentially useless for describing the city's financial condition.

How difficult would it be to make such a report available to either the public or city council members? Not very. The city has all financial entered into a computerized accounting system with the ability to generate reports almost instantly once said report is defined. For example, I sit as a member of the Galesburg Library Board that meets monthly. Before each meeting we receive a brief summary of the financial condition of the Library including comparisons to historical and budgeted amounts. This report is provided by, you guessed it, the city finance department. Admittedly, the Library is a fraction of the size or complexity of the entire city budget but I have little doubt that a similar brief report could be made available on a monthly basis covering the financial state of the city if the administration were willing to be so open.

There is no question that the financial challenges facing the City of Galesburg are significant but they become no less so by the reluctance of city officials to provide timely and useful financial information to either elected officials or the public at large. At this point it seems clear that everyone outside of the Galesburg finance department will just have to wait for the audited Comprehensive Annual Financial Report for 2007 to be released in June before we can begin examining on how the city fared financially last year.

5/08/08