Author: Clint Paulson

A e-mail submitted to the City Council after its meeting last week revealed startling rumors about the Finance Department and the City’s hiring practices. The e-mail was sent to the entire Council last Wednesday night. The e-mail was not included in the 300 page City staff report proposing a reduction in the City Treasurer’s compensation even though it’s common practice for the City to include correspondence received from the public on agenda items in advance of the meeting.

Another e-mail, sent by Sheila Abalayan, was sent last Thursday afternoon. That e-mail, in which Abalayan was strongly critical of current City Treasurer Dana Cortez, was included in the staff report even though it was received a day after the e-mail that was omitted. The omitted e-mail reads as follows in its entirety [with the exception of formatting errors]:

Dear honorable Mayor, Council Members, City Treasurer and City Clerk,

I attended yesterday’s Council meeting and I have a big concern about what is going on in our City now, especially in the Finance Department. I am a long time Citizen here and I support to have a separate Treasurer Office rather than moving it under Finance Department.

I’m also questioning the City’s hiring policies and procedures, and the integrity of the City’s management because I heard a lot of rumors recently. Here is what I heard, which should be very shocking to every concerned citizen, if they are true:

1. Two years ago, A new position of Finance Revenue Manager was created specifically for Finance Accounting Manager Ms. Royes’ daughter because she was out of work for a year already and urgently need a job. Unlike the other applicants, she did not go through the formal interview process but was hired through a “lunch interview”. I heard there are many more qualified applicants who are much more experienced than her.
2. Around the same time, Ms. Royes’ son was hired as the Senior Manager (a new position specifically created for him) in the Department of Public Works due to his Mom’s close relationship with PW’s Director. Also, there are a lot of applicants are much more qualified than him.
3. The Finance Assistant Director is retiring so they planned to have Ms. Royes to take over his position to boost up her pension payments since she plans to retire in two years. After she retires, her daughter will be the next Assistant Finance Director. But later they changed the plan and decided to let her daughter be the Assistant Director right away so her Son can move over as the Revenue Manager. Since the daughter has not enough experience the Current Assistant Director decided to stay to train her and there will be TWO Assistant Directors at the same time for SIX months.

If we have a daughter as Assistant Finance Director, a Mom as Accounting Manager and a son as Revenue Manager that all work in the same Finance Department, I cannot imagine how we are going to check and balance the City’s funds if the Treasurer’s Office is moved to Finance Department.

I respectfully request City to set up an independent panel to investigate whether there are any violations of the City’s policies and procedures for hiring the Accounting Manger’s daughter and son, and whether it is against the City’s policy to have the family members to work in the same department as the management.

Sincerely,

A concerned Torrance Citizen

Another document in the staff report listed 560 (or roughly 112 per year) errors due to transactions that were not posted or that were posted incorrectly by the City Treasurer’s Department over a near five year period (July 2013 – April 2018). A separate report obtained through the City Treasurer puts those errors in context. That report provides evidence that the Treasurer’s office processes an estimated 155,400 transactions a year. The report listing the total number of transactions was also not included in the staff report.

When City Treasurer Dana Cortez talks about transparency its not just a campaign slogan, she means it. Cortez could have signed a Confidentiality Agreement presented to her by the City Attorney, but she refused. The Agreement likely would have prevented any evidence prepared by the City pertaining to her job performance from being disclosed to the public. By not signing, Cortez took a significant personal risk knowing that her reputation was on the line, but in deference to the voters that elected her Cortez wanted everything out in the open.

Cortez forced the City’s hand and she now has her wish in the form of a 300 page staff report prepared by the City to justify why her compensation should be slashed by over 50%. Perhaps most telling in this whole drama is that despite being on the job for eight years, Cortez says that with the release of this 300 page report it is the first time that she is hearing about these concerns as nobody within City Hall has approached her to raise these specific issues before now.

As an elected official Cortez does not receive a formal employee performance evaluation but her activities are reviewed by an oversight committee comprised of the City Manager, the City Attorney, the Finance Director, herself and the Deputy City Treasurer.  Presumably, these concerns could have been brought forward by the oversight committee, but according to Cortez they were not.

The staff report is mostly fluff containing nearly 150 pages of job descriptions, internal procedures, and org charts, but it does some provide some eye opening information. In it, the City alleges that the Treasurer’s Office suffered from an an overall lack of reliability due to errors, omissions, and high staff turnover.

With regard to high staff turnover, the report revealed that since June 2011 fifteen employees had ended employment in the 7 person department with 8 resignations, 3 retirements, 2 discharges, and 2 transfers to other departments. Two of those 15 people had very negative feedback about the department based on documentation provided by the City.

One employee who resigned in March 2017 wrote that:

“The City Treasurer has been disrepectful on too many occasions, provided little to no support, provided mis-information, engaged in hostile and demeaning conversations, made false accusations, and kept me in the dark on critical issues; all of which has made it unbearable for me to be here any longer … to be harassed, bullied, and disrespected while in the performance of my duties is more than anyone should have to deal with.”

An e-mail from former Deputy City Treasurer, Shiela Abalayan, who wrote to the Council after the meeting last Tuesday was also included in the report. No information from Abalayan during her tenure with Torrance was included in the staff report (nor was her exit interview), but in her e-mail Abalayan claimed that:

“Watching her speak in the City Council meeting last Tuesday, brought back all the negative feelings and bad memories and experiences I had with Ms. Cortez. I was not her first victim, the lady before me … was fired on her 50th birthday. Who in her right senses does that to an employee? What does that tell you about the kind of person she is … employees would rather leave than to work in a very hostile and stressful department caused by the department head, Ms. Dana Cortez”

In speaking with Cortez about these allegations she acknowledged that high turnover had been a challenge for the department as people just don’t stay at one job for 25 years like they used to. In reference to the specific feedback, she said she had no idea it was the 50th birthday of her former employee on the day that person was fired and that the termination was the result of a long process that so happened to conclude on that day.

With regard to the other employee who resigned in March 2017, she cited her own challenges she had with the employee recalling on one occasion, when she was out of the office recovering from a skiing accident, that the employee had put up a sign in the office window during a regular working day saying that the Treasurer’s office was closed.

With regard to errors and omissions the City, among other things, produced the following:

• A report from July 2013 – April 2018 of financial transactions that come from the Treasurer’s system and feed into the general ledger listed 560 errors due to transactions that were not posted or that were posted incorrectly;
• Monthly investment report for June 2017 submitted to Council contained an error. The submitted report stated “as of May 31, 2017.” It was corrected and resubmitted to correctly state “as of June 30,2017”.
• A duplicate monthly payment was made to CalPERS in December 2017 of $1,279,736.56. CalPERS ended up applying the over payment to the January 2018 invoice.

In reference to these errors, Cortez responded by saying “I’m not perfect, but I will always be honest and act with integrity.” She acknowledged the errors and took responsibility for them as they occurred within her department. She said the Investment Report contained the right numbers, but had a “scrivener’s error” that was quickly corrected. The over payment to CalPERS was due to a new employee that just made a mistake. According to her, the list of financial transactions is something that had been an ongoing challenge for the department due in part to the high turnover and was something they were continually working to correct.

Cortez’s initial inkling that something was afoot came last year when the City Manager proposed realigning several of the duties that had previously fallen under her department. With regard to that realignment she penned a memo to the City Manager dated November 21, 2017. In it she states,

“I am completely supportive of progress and any changes that promote efficiencies, productivity, and growth. It is equally my duty to share concerns that I believe to be material to this beloved organization. As an elected official I strongly believe that it is my duty to be the voice of the people. The position of City Treasurer per the Charter is to be the acting steward of the the people’s tax dollars. Since I take this responsibility seriously I feel it is my duty to mention concerns I feel are noteworthy.”

She then expressed concern that the “City of Torrance is diluting its ability of taking full advantage of the separation of duties and checks and balances that have existed in the City for years.” She also expressed a concern about the appearance of impropriety because “currently in the Finance Department there are two key division managers with huge authority over many of the key functions that are between a mother and her daughter … the relationship of these two key staff members could be viewed as a concern.”

In response to Cortez’s memo, Finance Director Eric Tsao sent a memo to the City Manager dated December 17th, 2017. In that memo, Tsao wrote:

“It is all too apparent from the onset that the City Treasurer has been and remains in disagreement with the City Manager’s decision to return the above functions from her office to the Finance Department … The transition of the above duties can be best described as a “Very Hostile Takeover.”

Cortez begs to differ with that characterization. She claims her office was very cooperative during the transition and went above and beyond to provide whatever support the Finance Department needed. She did, however, describe an office environment that had become challenging and territorial. She remarked it felt as if members of the Finance Department were almost purposely looking for mishaps that might occur in her department in order to curry favor with city management.

With regard to her future, no matter the outcome of Tueday’s meeting she plans to stay on as Treasurer. She said Assistant City Manager, Aram Chaparyan, had recently directly asked her if she intended to resign as a result of these allegations and that she told him she did not as she plans to honor the will of the voters.

In a stunning move, the City has proposed slashing the compensation afforded to the City Treasurer by over 50%. Per Transparent California City Treasurer Dana Cortez made $134,976 in regular pay in 2016 and received $196,604 in total pay and benefits. The proposal would reduce her salary to $65,088 a year.

Cortez ran unopposed for the City Treasurer’s office in the recent election and received 100% of the vote. Cortez has worked in the City Treasurer’s office since 2000 and has served as the City Treasurer since 2010 when then Treasurer Linda Barnett retired.

The City staff report indicated the reduction in pay was based on a realignment of duties that occurred in early 2017. Cortez stated at the meeting that she expressed concern to the City Attorney’s office at the time the realignment occurred over whether the City Manager had the authority to effectuate the modifications. She was informed at the time by the City Attorney that it was within the City Manager’s purview to effectuate the change even though her duties are outlined in the City Charter.

City Attorney, Patrick Sullivan, affirmed during the meeting that there was nothing improper about the realignment and that such modifications were not in violation of the City Charter.

Cortez asserted that the proposed resolution was brought forward shortly after she refused to sign a confidentiality agreement that the City Attorney had requested that she sign. Cortez also said she did not sign the confidentiality agreement because her job was to be transparent and accountable.

The realignment of duties caused key tasks such as central cashiering, utility payments, coordination and reconciliation of bank deposits, wire transfers of city funds, and processing of parking citations to be assumed by the Finance Department.

When pressed by Mayor Furey about why the realignment occurred, Assistant City Manager Aram Chaparyan referred to errors and omissions in various staff reports and a high turnover rate in the City Treasurer’s office.

Former City Treasurer Linda Barnett spoke at the meeting and expressed concern that the realignment of duties removed important checks and balances pertaining to city finances. Barnett also expressed frustration that the matter had previously been discussed behind closed doors in a closed session of the Council.

On that point she stated:

“To me if there is anything that is going on that is inappropriate, the residents of Torrance have a right to know. This should have been handled a lot differently than it was … it’s not an employee situation … I really do believe this should have been handled in an open forum where issues could have been brought out and Dana would have a chance to speak.”

Cortez herself echoed that concern at one point adamantly stating,”The voters deserved to know before the election so that they could cast their votes informed.”

Councilwoman Ashcraft explained the reasoning for holding the closed door session by saying, “The reason the matter was discussed in closed session was to protect your integrity … it was not to not be transparent.  It was to protect.”

The City Council did not act on the proposal instead opting to have the matter brought forward again at its next meeting where presumably all issues pertaining to the matter can be discussed in an open session since the Council also waived its privilege to have the matter heard in closed session.