Staff turnover contributes to critical Auditor’s report

By Paul Archipley | Dec 21, 2016

The good news is the state Auditor’s Office gave the city of Mukilteo a clean audit on the city’s 2015 financial statements. The bad news is the city filed those statements late. Again.

In fact, it was the fourth year in a row that the City has missed the filing deadline as prescribed by state law. According to the Auditor’s Office, final 2015 financial statements weren’t ready for audit until nearly two months after the statutory deadline.

Part of the problem, City officials agree, is staff turnover. In 2015, the City experienced turnover in key accounting positions, including the finance director, accounting manager and staff accountant.

In the finance director’s position alone, the job has been a revolving door. Scott James, who had worked in the role for seven years, left in the spring of 2014 to become finance director for the city of Edmonds.

He was followed by Scott Morgan, who went to work for the City in July 2014.

It didn’t work out. One year later, he was gone.

An interim finance director filled in until October 2015 when Mayor Jennifer Gregerson hired Doug Volesky for the position. He is largely credited with cleaning up the Finance Department’s “deficiencies in controls” cited by the Auditor’s Office.

The Auditor said: “Current staff is knowledgeable of accounting practices and have significantly improved the financial reporting of the City as well as overall internal controls.”

In fact, part of the reason the City missed its 2015 filing deadline was that Volesky and his team identified an error made in a prior reporting period that had to be fixed.

In fact, both the Auditor’s Office and Volesky said the City would be able to file its 2016 financial statements on time. In its report, the Auditor stated, “The City has made significant improvements in timely financial reporting and is now back on its normal audit schedule.”

But don’t break out the champagne. Volesky has tendered his resignation, having accepted a similar position for the city of Mount Vernon.

Why the rush to the exits? Part of the problem, Gregerson and others said, is salaries. There’s a lot of competition among local municipalities for good employees, and Mukilteo, being a smaller city, doesn’t have the financial power to compete.

That’s why Gregerson took the City’s salary schedule to the City Council this year and asked for raises for many non-union positions.

Long-time Councilmember Randy Lord noted the turnover problem over the last couple of years hasn’t been only in the Finance Department. Both the police chief and fire chief retired. The senior planner left to become the planning director in Snohomish. The Public Works director was fired. There were other departures as well.

“It’s been turnovers across the whole city,” Lord said.

Council President Bob Champion agreed. “It does appear to be that perfect storm of retirement, the desire for achieving personal goals and better outside opportunities,” he said.

Both Lord and Gregerson said the City needs to find a way to attract and retain good people.

“Hopefully, the salary adjustments we’ve made will help,” Gregerson said. Those increases were based on the median of salaries offered for similar positions in comparable cities.

Arguably, they were long overdue. The last time non-union employee salaries were raised to the median was in 2007.

Lord said it will always be difficult for a small city like Mukilteo to keep up with the Jones. He said part of the focus should be on finding people who appreciate working in the city itself.

“What we want is to find people who love this place,” he said. The alternative, he noted, if you want “big city bucks,” you have to be prepared to deal with “big city problems.”

While Mount Vernon is only slightly larger than Mukilteo – 32,600 in 2013 – it made an offer Volesky couldn’t refuse.

“My decision to leave was not an easy one for me,” he said. “I was not actively looking for a new position … The City of Mukilteo has been incredible to work for.”

But, he said, better pay was a factor in his decision.

While the City now searches for Volesky’s replacement – Gregerson said they have received several applications – Lord said the increased scrutiny and active participation by the council’s Finance Committee should help ensure future financial statements are filed on time.

Champion said getting the audit schedule back on track has been a high priority.

“The net result was that the ability to correctly state the city’s financial position greatly improved the budget process this year,” he said. “I am pleased with the accounting improvements and the progress that was made in 2016.”

The proof is in the pudding, Lord noted. The administration presented and the council approved the 2017 budget weeks earlier than had been typical in previous years.

And both Volesky and Gregerson assured that the 2016 financial statements will be filed with the state on time.

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