05/04/2023
Former City Manager Ferrell-Benavides came to Duncanville after a brief tenure in Petersburg, Virginia. After publicly committing to staying "at least five years," rumors began to arise about her seeking other jobs within her first year. She denied this, however applied for and began taking interviews within at most two years.
Ferrell-Benavides came to Petersburg in 2018 after the City was under the supervision of the Robert Bobb Group (RBG) for almost two years for Emergency Financial and Operational Restructuring following a failure in the City's Management, and was provided a 5 year plan by RBG to navigate the recovery.
After Ferrell-Benavides was City Manager for a year, RBG performed a review and many of the 'Significant Risks' identified in the report echo many of the concerns Duncanville is seeing now, and may be an indication of other issues Duncanville has yet to address. Could it be that Ferrell-Benavides was looking for an out after this poor review? And now with Ferrell-Benavides' hire for Duncanville's Finance Director abruptly resigning, are we looking at more yet to be discovered problems coming from the tenure of Ferrell-Benavides?
1) The City of Petersburg has not maintained a daily, weekly, or monthly cash flow review as left by the RBG to manage the finances of the City, nor has this been presented to City Council. This is a significant risk to the City given the lack of available cash reserves to even out the revenue streams and represents a return to past practices.
2) City of Petersburg to seriously consider the Five-Year Financial Action Plan recommendations, and pay specific attention to remediate the audit findings as identified by the external auditors.
3) The FY ‘18 Approved Budget (adopted while the RBG was managing the City) as managed by the current management team, had significant overspending during the transition.
a. As a result, the City management team projects a $300,000 surplus for FY ‘18. Not only is this significantly below the projected $2 million surplus from the RBG, it is at risk of not being achieved given that $500,000 in surplus real estate properties included in the revenue assumptions may not occur prior to the fiscal year end. To date, the City has not executed a plan to support this $500,000
assumption should it not materialize.
b. One-time revenues from the sale of property are not being put toward one-time uses, or the establishment of a fund balance, as required by the Council-adopted financial policies
4) Transitionary audit between the City Treasurer and Collector of Taxes was started but not completed by CliftonLarsonAllen LLP, the City’s Internal Auditor, due to lack of follow-up from the City.
5) There is no financial plan for the Utility Fund’s significant capital needs.
a. Some areas related to the Utility Fund could lead to a technical default by the City on bonds outstanding through the Virginia Resources Authority (VRA). If this occurs, an immediate repayment of the outstanding bond principal could be required by VRA, thus leading to a financial disaster far bigger than the summer
of 2016, before the RBG was hired. Immediate remediation is encouraged.
b. We strongly encourage the City management to work with its financial advisors and its bond attorneys to understand the bond covenants surrounding the Utility Fund, the use of the Utility Rate Study, and the commitment to uphold them.
6) The Utilities infrastructure continues to be a significant risk as the City continues to deal with water main breaks and boil water notices. There may be a risk if the prime contractor for water main break repairs refuses to do business with the City due to concern over invoice payments. The capital budget and plan that was approved last year has not progressed with the same sense of urgency as RBG recommends.
a. In a February 21, 2017 Council presentation on the “Utility System Overview,” the water and wastewater infrastructure and its financial challenges were carefully detailed.
b. There is an operational risk with the recent departure of the Utilities director. This risk can be mitigated through the hiring of experienced personnel or outsourcing the management and operations for Utilities.
c. CityWorks software was purchased by the City to automate public works repair requests utilizing the City’s Geographic Information System (GIS). Timmons Engineering provided CityWorks training for Public Works staff in late June 2017.
The Public Works Department is not currently using CityWorks.
7) Billings and Collections continues to be an area of significant risk and challenge as it impacts the flow of revenue to the City. The transition of duties to the newly hired Collector of City Taxes requires greater collaboration between that office, the elected
Commissioner of Revenue, and the elected Treasurer. There continues to be a disjointed flow of information from the Commissioner of Revenue, the Collector of City Taxes, and
the City Treasurer. The Billing and Collections activity and analytics are not understood by all involved, and they are not actively tracking collection activities. This includes a need for documented and understood process flows of all billing and delinquency cycles
that all parties review and follow.
a. As the City transitions to a new Collector of City Taxes model, the City must continue to work very hard to improve the Utility Billings processes and systems. Utility Billings is a critical piece of the overall collections process as it manages the only monthly recurring revenue to the City.
b. The RBG strongly encourages the City to implement the recommendations of the Severn Trent Report completed in August 2017.
8) The Treasurer’s Office is not depositing customer payments in a timely fashion leading to continued customer complaints. Additionally, there is a significant risk and liability with how cash is handled by the City. The physical location of the City Treasurer’s Office should be re-evaluated. At risk of exposing the vulnerability, the RBG will not report in this document but will ensure that City Council and City management are fully aware of the risk that exists to how cash is managed in the City.
KEY AREAS OF RISK:
a. Online Banking – HIGH PRIORITY: There is an urgent need to develop a process to confirm funds have been credited to a customer’s account in a timely manner after an online payment has been made. This is an “All Hands On Deck” issue to be solved
immediately.
b. Roles & Responsibilities – HIGH PRIORITY: The City should urgently confirm the role and responsibilities of the Treasurer and the Collector of City Taxes.
c. Training & Development – HIGH PRIORITY: It is an urgent and immediate need for the City that the Treasurer identify resources for training, development and business process mapping.
d. Permanent Staffing: The Treasurer’s Office has a critical vacancy that needs to be filled immediately. Need job descriptions for all positions in the Treasurer’s Office.
e. Bank Reconciliations: The Treasurer’s Office is several months behind in bank reconciliations of the City’s bank statements. The City administration should work with the Treasurer’s Office on resources and staffing beyond what is currently there to eliminate the backlog.
f. The Treasurer is responsible for all online banking services. There is a critical need for documented policies, practices, practices, procedures, and business process mapping.
g. The Treasurer should develop an Investment Policy. The purpose of this Investment Policy would be to secure the best interest rates for the City’s funds, and the policy should be approved by City Council
9) . The FY ‘19 Proposed Budget did not develop a capital budget or Capital Improvement Plan (CIP) at the time the operating budget was developed. A CIP should have been presented to the City Council at the same time as the FY ‘19 Operating Budget. The
Council’s adopted financial policies (available on the City’s website) require that an annual capital budget be prepared as part of the CIP. On p. 13 of the Adopted FY ’18 Operating Budget, Capital Improvement Budget Policy #4 states: “The City will need to
coordinate development of the annual capital budget with development of the operating budget. Future operating costs associated with new capital improvements will be projected and included in operating budget forecasts.” In addition, leading practices in the Commonwealth of Virginia are to develop a CIP and present in conjunction with annual operating budget. Given these were not developed together consistently, the needs for capital projects are not being fully represented on the operating side of the budget.
10. The FY ‘19 Proposed Budget was developed without an updated Cost Allocation Plan so this could be a financial vulnerability once the new plan is updated. In addition, $250,000 was budgeted from the Perpetual Care Fund. This figure exceeds the interest earned and will need to be addressed prior to the budget being adopted.