- The Washington Times - Friday, March 3, 2000

If anyone believes that the District's failure to produce its fiscal 1999 year-end audit by the legally required deadline of Feb. 1 and now the possibility of missing the extended deadline of March 15 is the result of computer glitches, as Chief Financial Officer (CFO) Valerie A. Holt and her supporters claim, step this way: There are more bridges to buy.

The fiasco can best be described as a series of "P" problems personnel (principally Ms. Holt), poor planning, passing the buck and political shenanigans. The solution has been another "P" prop up. Former interim CFO Earl Cabbell has been called in by the financial control board to effect a rescue, hoping to catch the egg before it smashes across Alice Rivlin's face. Mrs. Rivlin's behind-the-scenes lobbying won Ms. Holt her mayoral appointment, although another candidate Natwar Gandhi was eminently more qualified.

The delay of the financial audit is no small matter. It has the potential for reverberating on Wall Street and could adversely affect the District's bond rating. Properly played on Capitol Hill, it could instigate congressional calls for retaining the financial control board. And, the lack of a financial audit makes it extremely difficult to develop a solid budget for fiscal 2001.

Even if Mrs. Rivlin, former vice chairman of the Federal Reserve and current chairman of the control board, doesn't understand the universal ramifications, the D.C. Council obviously does. This week in a scathing letter, eight lawmakers urged the board to fire Ms. Holt, immediately; under federal law only the congressionally created board can fire the CFO.

Council members Jack Evans, Kathy Patterson, Jim Graham, Vincent Orange, Charlene Drew Jarvis, Sharon Ambrose, Phil Mendelson and David Catania cite instance after instance during Ms. Holt's brief nine-month tenure where she made decisions detrimental to the city's still-tenuous fiscal recovery. "We have no confidence in Ms. Holt's ability to address the leadership, management, and financial issues before the District," the council wrote.

Mayor Anthony A. Williams, who since August privately has expressed his own concerns about Ms. Holt's management of the office he once directed and her ravaging of the foundation he constructed with talented financial experts, joined the council's criticism but did not call for her resignation. As with the school governance fight, Mr. Williams seems under Mrs. Rivlin's spell, acquiescing to her position despite clear signs her advice jeopardizes the city's future stability.

How can the mayor and council effectively discuss expansion of health care benefits to uninsured residents when they have no hard numbers on which to project program spending? How can they effectively push neighborhood economic development where there is no previous benchmark on which they can make future projections? How can they determine the amount of money to dedicate to public safety when the CFO can't produce audited budget numbers?

No one should feign shock over this latest fiscal disaster. Indisputable evidence of Ms. Holt's incompetence was presented last summer during her council confirmation hearing. Ms. Holt was one of the so-called experts who, during the Sharon Pratt Kelly administration, rived the city's financial management, using what the General Accounting Office (GAO) called "gimmicks" to mask the damage. Then as now, Ms. Holt has attempted to distance herself from the facts.

But who can deny her role this time? Days after stepping in as CFO, a report from the GAO presented issues related to the new computer system that could affect the smooth delivery of the year-end audit. Ms. Holt failed to take sufficient action to resolve many of the outstanding problems. In November 1999, Mitchell & Titus, the firm hired to actually conduct the audit, warned city officials including Ms. Holt that given the CFO's inability to provide important information and documents there was an outside chance the District would not meet the statutorily required Feb. 1 deadline.

Ms. Holt's own staff had alerted her in October 1999, in writing, of issues that could threaten the timely submission of the report. Then again in December 1999, another written warning came from staff members. That memo charged Ms. Holt with failing to accept proposals designed to resolve the critical issues facing the completion of the audit report, prohibiting the allocation of personnel and other resources, procrastinating, and interfering with staffers assigned to the project.

Faced with this evidence of the Peter Principle in full swing, this CFO can't be pushed out the door fast enough. One need only look to the recent past as reason for quick action. Remember Camille Cates Barnett who walked off with a quarter of a million dollars but not before lining the pockets of her friends? How about Department of Human Services Director Jearline Williams, whose failed leadership is partly responsible for the $1.6 billion class-action lawsuit the city faces?

If the control board does not respond favorably to the council's request and the mayor's concern, it can only mean that Mrs. Rivlin's personal relations with Ms. Holt prevent objective action. In which case, residents and taxpayers may want to hold on tightly for the dangerously rapid ride downward that is sure to come.

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