In third act of Anchorage’s accounting ‘cautionary tale,’ a CFO races to close $147M deal

Alden Thern is Anchorage’s main fiscal officer. He began successful nan position successful May of 2023. (Photo courtesy of nan Municipality of Anchorage)

Anchorage’s finance bureaucrats pulled disconnected a flurry of technical, but critically important tasks connected a very compressed timeline successful nan past fewer weeks that culminated pinch $147 cardinal being wired into metropolis accounts connected Thursday.

That money represents nan will of Anchorage voters to put successful metropolis and schoolhouse infrastructure done indebtedness to beryllium repaid complete clip pinch spot taxes – and it almost went awry.

The series of events each hinged connected nan completion of nan 2022 type of a dense financial study that nan metropolis is expected to put retired each year, nan Annual Comprehensive Financial Report, aliases ACFR.

The study is an workout successful authorities accounting and transparency: A bunch of end-of-year financial statements that summarize nan city’s fiscal position, section by department, that an independent auditor has vouched for. 

On paper, nan 2022 ACFR was due successful nan outpouring of 2023, though these reports usually travel retired successful nan summertime aliases fall. But because of dysfunction astatine nan metropolis and utmost turnover successful nan section responsible for bookkeeping and preparing for nan audit, it was highly late. 

The progressive 907 Initiative moreover made nan overdue study a portion of its  “incompetence has a value tag” campaign past twelvemonth that targeted then-Mayor Dave Bronson.

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 tenure. (Courtesy of Municipality of Anchorage)

Sharon Lechner, Bronson’s past head of nan Office of Management and Budget, lent her accounting expertise to nan audit effort. She said she stayed connected pinch nan caller management for 2 other weeks to spot nan study through, astatine nan petition of nan caller Mayor Suzanne LaFrance. 

“This is simply a alleviation and besides a cautionary tale,” LaFrance said astatine nan Anchorage Assembly’s July 16 meeting, aft announcing nan completion of nan 2022 ACFR. “We must get our municipal finances successful bid and guarantee stableness going forward.” 

Alden Thern, nan city’s main fiscal officer, later said nan completion of nan financial study “happened astatine nan latest imaginable clip that it could’ve.”  

Thern has nan closing to this cautionary tale, but first, a small backstory. In April, Anchorage voters authorized $124 cardinal successful caller metropolis indebtedness to salary for agelong lists of superior projects, from replacing nan tile astatine Chugiak High School to resurfacing a mile of Northern Lights Boulevard to making parks much accessible to group pinch disabilities. The metropolis besides has rather a spot more indebtedness capacity that voters authorized successful earlier elections.

The metropolis sells bonds successful nan financial markets to raise that money. To get nan astir favorable liking rates, nan metropolis needs an up-to-date enslaved rating, which is for illustration a in installments score. The amended nan enslaved rating, nan little nan consequence for nan enslaved buyers. And nan little nan risk, nan little nan liking rates Anchorage’s spot owners will person to salary for done their spot taxes.

The enslaved standing agencies couldn’t complaint nan metropolis without audited, up-to-date financial statements – nan ACFR. But nan city’s 2022 study was truthful late, Thern said it would only beryllium existent successful nan eyes of nan standing agencies until July 28.

“That’s erstwhile nan ‘23 financials are due, and we don’t person them, obviously, moreover started yet,” he said. 

Thern said he prepped nan enslaved standing agencies successful beforehand pinch draught versions of nan overdue financial report, and they were nan first to get nan last type connected July 15. 

Three days later, nan city sewage a caller enslaved rating. It slipped a notch since its past one successful 2022, but Thern said that’s still amended than nary rating.   

“The ratings thief make nan bonds much solvent, and arsenic such, we get amended pricing,” he said. “We could’ve sold bonds pinch nary ratings, but they would’ve costs much money.”

The city’s bonds went connected waste connected July 19, terms were settled connected July 22, and nan woody closed and money wired connected July 25. 

Thern said normally, enslaved income return 2 to 3 weeks to close. His agency did it successful one. 

“It was a past gasp of nan CFO trying to get everything done successful that peculiar clip period,” he said. 

All told, nan metropolis raised $147 cardinal astatine a competitory 3.734% liking rate. Thern said that should beryllium capable money to screen nan metropolis and schoolhouse district’s superior needs until 2026. With activity conscionable opening connected nan 2023 ACFR, it’s not clear erstwhile nan metropolis will beryllium capable to waste bonds again.

Anchorage Assembly personnel Felix Rivera plans to statesman nan post-mortem connected why nan 2022 ACFR was truthful precocious successful a committee he chairs connected July 31. 

In a property release, LaFrance noted that the latest enslaved standing report lays retired clear steps nan metropolis tin return to amended its rating. 

“The municipality’s financial wellness is simply a priority, and my management commits to beardown fiscal management,” she said.