- The Washington Times - Friday, April 7, 2000

First some District officials blamed the expected one-month delay of its year-end fiscal 1999 audit on computer glitches. Others pointed to the fact that less than 50 percent of the staff in the Office of the Chief Financial Officer (OCFO) had been trained on the new system. Behind the scenes, individual employees were being singled out, although in each case these same workers had notified their superior of impending doom, if action swift action were not taken. Later, the outside auditor who actually certifies the state of District finances declared the delays had been caused by a lack of leadership at the OCFO. Now comes word that the thing that has stretched the original delay from one month to more than two months is an accounting error related to a $40 million payment to Metro, and failure to record $26 million of expenditures.

What is a four-letter word that means mess-up and scapegoating? H-O-L-T, as in Valerie Holt, the District's chief financial officer. The woman brought in nearly a year ago by Mayor Anthony Williams, under pressure by financial control board Chairman Alice Rivlin, to manage the OCFO has yet to claim responsibility for any of the snafus that with increasing regularity have visited her cluster.

Don't blame her for the mass exodus from the OCFO of more than 30 talented finance professionals. Don't blame her for the fact that many employees still remain untrained on the new system. Don't blame her for the problems with the school system payroll, which meant that people who had never even worked for the District received checks for thousands of dollars. Don't blame her for the projected overspending in fiscal 2000 of more than $70 million. Don't blame her for the poor budget and financial plan for fiscal 2001 submitted to the D.C. Council by the mayor. Miss Holt is the type of bureaucrat who wants worship but ducks the work and the criticism.

Never will she admit that if she had conducted a trial run of the computer system she could have discovered the glitches long before preparation for the audit began. District government sources say that Miss Holt had been told about the $40 million Metro payment nearly two weeks ago, but resisted information from her own staff pointing out the inaccuracy. Even if others in her office had not caught the mistake, if Miss Holt had been reconciling the city's books with its bank statement, it wouldn't have taken her more than a year to discover the "accounting error."

"If this were a publicly funded corporation, we would have fired the chief financial officer," at-large council member Phil Mendelson has said.

The District government is a publicly funded corporation. Most of its revenue comes in the form of tax dollars, generated largely from residents and businesses, who for all practical purposes should be seen as stockholders. Elected officials, including the mayor and council, are stockholder proxies; in this capacity their efforts to determine the cause, effect and culprit and to exact appropriate punishment have been woefully inadequate.

Nine of 13 council members, including Jack Evans, Kathy Patterson and Charlene Drew Jarvis, called last month for Miss Holt's resignation. The control board, which has the sole power to fire the CFO, ignored that request. Mr. Williams, the former CFO who understands the intricacies of the job, privately has complained that he is not happy with Miss Holt; he has hinted that he might push for her termination. But the mayor has yet to acknowledge officially the obvious potential damage this has caused to the District's full fiscal recovery.

Control board Executive Director Francis Smith says "at this moment" there hasn't been any talk of changing the CFO. Which is to say that the five-member, congressionally created panel continues its usual posture of inertia, while the city's budding reputation for fiscal efficiency is slowly eroded.

By raising the specter of an accounting error, Miss Holt hopes to take the edge off the mounting criticism of her management. But even Mr. Smith says, "If things had been handled differently, you'd have a manager over this; you would have had more quality control." Except that Miss Holt is the manager ultimately charged with this responsibility. She failed to perform the normal checks and balances to ensure such accounting errors are discovered well before the time when they can cause drastic problems to the financial records system. Further, Miss Holt, as CFO, is responsible for making sure that each transaction is recorded in the city's financial management system, including the $26 million that can't seem to find a home.

In view of all of these blunders, the amount of staff time involved in correcting past mistakes, the nagging question is: Who is minding the store? Who is actually making entries for fiscal year 2000? Who is ensuring these entries are accurate? Who is running trial balances, ironing out computer glitches? And who is reconciling the books?

Not unlike the past, this new "improved" District government seems to be blind to the correlation between failed leadership and failed results. Which doesn't bode well for stockholder investments, but is a blessing for people like Miss Holt.

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