Anchorage Mayor Bronson’s final resignee warns about ‘time bombs’ in city’s bookkeeping

Sharon Lechner served arsenic Anchorage’s main financial serviceman nether mayors Mark Begich and Matt Claman, and head of nan Office of Management and Budget for nan past 8 months of Mayor Dave Bronson’s tenure. (Courtesy of Municipality of Anchorage)

In nan lengthy procession of much than 30 executive firings and resignations that cast a shadow connected City Hall during Anchorage Mayor Dave Bronson’s tenure, Sharon Lechner’s doesn’t fit. 

“I’m a beautiful uninterest – an uninteresting person,” she said pinch a stumble and a laughter astatine her confirmation hearing arsenic nan head of nan Office of Management and Budget.

“That’s precisely really we for illustration our books,” Assembly Chair Chris Constant quipped. 

Lechner, a certified nationalist accountant who served arsenic nan city’s main financial serviceman nether erstwhile mayors Mark Begich and Matt Claman, would travel to study that Anchorage’s books are very absorbing – successful bad ways. 

A fewer months aft nan hearing, she delivered a blimpish accountant’s type of a mic drop. She told nan politician successful May she was quitting because nan Anchorage Assembly rejected fund revisions to reside various accounting problems. 

Since taking nan occupation successful November, Lechner had flagged a litany of problems successful nan city’s accounting systems that she said could frighten nan city’s credit, adhd tens of millions of dollars successful astonishment liabilities to nan city’s equilibrium sheets and saddle taxpayers pinch expenses they shouldn’t beryllium responsible for. 

She moreover told a nationalist committee that nan metropolis has important “off-balance expanse liabilities,” not dissimilar nan erstwhile power elephantine Enron that imploded spectacularly successful 2001 amid revelations of accounting fraud and corruption. 

“Before nan implosion occurred, a whistleblower communicated to nan highest levels that indebtedness was being understated and net overstated,” she told nan Anchorage Budget Advisory Commission successful May. “Enron was 1 of nan first companies to bring nan conception of off-balance expanse liabilities to nan public’s attention.”

She and nan city’s independent auditors some opportunity there’s nary grounds of fraud successful nan city’s books. Her constituent was astir consequence and nonaccomplishment to heed warnings. 

“You tin get financial statements and deliberation things are OK,” she said. “But if location are different aspects of consequence that are not reflected connected your financial statements, and personification shares them pinch you and communicates them to you, it’s worthwhile to see listening.”

Lechner useful highly agelong hours, but made clip for an question and reply astatine a sleepy City Hall erstwhile astir of her coworkers were enjoying nan Juneteenth holiday. 

“I don’t person holidays,” she said. “We perfectly person to get this retired because my past time is June 30.” 

By “this” she meant nan city’s Annual Comprehensive Financial Report for nan 2022 almanac year. 

Going backmost to astatine slightest 2001, nan report’s ne'er been this late. The 2023 study is besides overdue nether the metropolis charter and code. Grants from nan authorities to nan metropolis are potentially astatine risk because of these overdue reports.

These reports are typically hundreds of pages long, filled pinch barren financial statements, lengthy notes connected those statements, and, ideally, an independent auditor’s sentiment that nan city’s bookkeeping reasonably and accurately reflects its finances, successful statement pinch master accounting standards. 

A cleanable sentiment is nan extremity Lechner’s moving toward pinch nan auditors. Nothing bully comes from a bad audit opinion. 

“So for instance, nan standing agencies that complaint you for bonds will position you pinch suspicion,” she said. “And you could beryllium penalized pinch a downgrade successful your enslaved ratings, which would equate to higher liking rates erstwhile you waste bonds connected nan market.” 

And that intends bigger taxation burdens for awesome metropolis projects. 

Lechner has a agelong database of reasons why nan yearly study is truthful late, including staffing levels that haven’t kept gait pinch nan city’s bookkeeping demands and  bonzer turnover successful nan controller’s section usually responsible for bookkeeping and audits. There’s besides a history of siloed, idiosyncratic accounting decisions that person rippled retired into systemic inconsistencies, errors and unintegrated systems. It each makes timely, large image financial reporting astatine nan metropolis astir impossible. 

“We’ll ne'er person cleanable books,” Lechner said. “We’re excessively large and excessively complex. But I do deliberation that it would behoove our organization for nan Assembly to person much accusation disposable to it, right? I mean, what’s incorrect pinch having timely, meticulous information?”

One of nan biggest problems Lechner recovered is related to a awesome package purchase nan metropolis made successful 2011. Explaining really this went nether nan radar gets technical, but basically, Lechner says location were errors astir really nan disbursal was allocated to various metropolis departments.

“The effect is that we thought our money equilibrium business was here, but successful reality, from our perspective, it was $27 cardinal worse than we thought,” she said. 

Multiple issues necktie backmost to nan privatization of nan city-owned Municipal Light & Power inferior successful 2020. Lechner said that transaction is still incomplete successful nan city’s accounting, but must beryllium closed retired successful nan 2023 financial statements to fulfill nan auditors. 

ML&P labor were portion of nan state’s Public Employee Retirement System, besides known arsenic PERS. There’s a wrinkle in authorities law that says nan metropolis has to support paying into PERS arsenic if galore of those positions still exist, for arsenic agelong arsenic nan state’s status strategy is underfunded. 

“And successful nan United States, location are only 5 states’ PERS programs that are afloat funded, and ours is decidedly not 1 of them,” Lechner said. 

In nan books, that ongoing disbursal falls connected nan wide money – metropolis taxpayers. But Lechner said nether the terms of nan voter-approved inferior deal, nan income nan metropolis gets from nan utility’s waste should salary for those status expenses directly.

Other accounting failures related to nan city’s workers’ compensation money person obscured what Lechner said is now an exponentially increasing deficit, connected nan bid of $33 million. The metropolis hasn’t been putting capable successful to screen its employees’ claims for years. 

That’s an rumor successful and of itself. But Lechner said if nan books connected nan inferior woody are closed earlier nan shortage is addressed, taxpayers whitethorn extremity up connected nan hook for nan utility’s information of nan deficit. 

Lechner has recovered much issues, large and small, that she fears will astonishment policymakers, for illustration clip bombs erstwhile nan accounting is straightened out. She’s outlined them and recommendations successful budget advisory commission meetings, and successful a modulation scheme bound for incoming Mayor Suzanne LaFrance, who takes complete July 1. 

And she’s tried to pass nan Assembly members, giving them handouts and her compartment telephone number. None called, she said. 

“The Assembly needs much information, because what they’re focusing connected is money equilibrium successful a vacuum,” Lechner said. “And it’s benignant of for illustration a equine pinch blinders on. Because they’re not looking astatine what’s coming connected nan right, and they’re not looking astatine what’s coming connected nan left. And what they’re missing are these ‘time bombs’ that – done nary responsibility of their own, really would they cognize this, right? – and past each of a sudden, thing happens.”

Meg Zaletel, who co-chairs nan Anchorage Assembly’s Budget and Finance Committee, said nan assemblage needs clip to digest and talk really to woody pinch nan issues. 

“That is why we person now made them a opinionated point connected nan Budget and Finance Committee,” she said. 

She said nan Assembly can’t make large changes quickly. 

“We don’t uncertainty nan seriousness aliases moreover nan urgency of doing so,” Zaletel said. “We conscionable don’t deliberation this was nan past opportunity.”

After Lechner explained accounting issues to a layperson for an hour, she needed to hole for her adjacent convention telephone pinch nan independent auditors. 

“I’ve astir apt saturated you to tears,” she said pinch a laugh. “There’s astir apt nary communicative here, I think.”

She plans to activity done this last play betwixt mayoral administrations to get nan audit done.