Writing Shotgun

FIRST HALF OF LONG BEACH ART MUSEUM AUDIT IS HERE

Theo DouglasMon. June 09
 

It’s official: at the June 17 Long Beach City Council meeting, City Auditor Laura Doud will release the first half of her agency’s audit of the Long Beach Museum of Art. The second half of the audit–including a complete inventory of the museum’s collection–is scheduled to be released in July.

If you click here, you should be taken to a PDF of the Auditor’s 28 pages of cover letter and audit, but here are some of the high points:

“The LBMOA Foundation, which runs the museum, has only $388,000 of the required $3,060,000 principal payment due to mature on Sept. 1, 2009, [to repay the construction bond on its new gallery] and has no formal plan in place to obtain the balance of the required funds.”

“The Foundation under-collected Capital Campaign contributions by at least $1,084,000.”

“The Foundation inappropriately spent $1,588,000 of restricted Capital Campaign contributions on its daily business operations.”

“The Foundation’s Board of Trustees terminated both the former Executive Director and the Director of Finance during 2006. Several significant issues, including misappropriation of assets and conflicts of interest, regarding the Foundation’s operations under its previous management came to our attention while performing the audit.”

The Capital Campaign, don’t forget was the fundraising campaign undertaken by the Foundation, to finance the museum’s new gallery.

And as Doud points out in the press release announcing the audit’s arrival, the Foundation “brought in new management in November 2006,” and “controls are being put in place to ensure that the problems identified in this report do not happen again.”

As for those “several significant issues, including misappropriation of assets and conflicts of interest,” the Auditor’s office discovered “altered deposit slips and cash receipts schedules,” and “use of business credit cards for personal purposes.”

The Auditor’s office also uncovered “no documentation evidencing disclosure by the then-President of the Foundation’s Board of Trustees that the company owned by her spouse was contracted to perform a small portion of the expansion project construction” and “use of the Foundation’s resources to operate a second, unrelated nonprofit organization.”

Whew! As for what should be done about all this, Doud’s office suggests the city and the Foundation figure out how they’re going to pay the construction bond–and do the following:

“We recommend the current Foundation management complete a thorough investigation of the improprieties mentioned in this report, quantify the Foundation’s losses, and recover those moneys, if possible. The Foundation should consider filing an insurance claim for its losses, if the losses are significant.”

The Auditor’s office also asks that city and Foundation staff keep the city council and the Auditor updated on their progress in 90 days, six months and a year from now.

In a prepared response which accompanies the audit, LBMOA Director Ron Nelson and current Foundation Board President Roberta Jenkins say the Foundation “has met with City management for discussions of strategic planning” on how to pay back the bond, and that the Foundation “is taking steps to ensure it will have the ability to meet its September 2009 deadline.”

As for the “several significant issues” Doud’s office mentioned, Nelson and Jenkins say they’ve “taken numerous steps” to create new policies and procedures to make sure these types of things don’t happen again:

“Proper oversight and internal controls were either examined or replaced and more importantly enforced with strict adherence. Local, State and National laws were examined to ensure complete compliance as the future health of the Museum was at stake.”

In some cases, Nelson and Jenkins note that the Foundation’s independent auditor was brought in to investigate, and that “Regulations for daily reporting and deposits of cash, checks and credit cards were changed and implemented.”

As for such problems as conflicts of interest, Nelson and Jenkins say a new and expanded employee manual has been put into use which spells all that out. Further:

“A Conflict of Interest Statement has been included in Trustee orientation materials but a separate standing policy has now been written and approved for all Foundation Trustees. The statements are signed and stored in each permanent file.”

As for the city’s take on this, Lori Ann Farrell has a prepared response also included with the audit. Farrell is the city’s director of financial management and its Chief Financial Officer.

She points out that “While the Foundation successfully raised $5,417,000 in its Capital Campaign, this amount fell short of the required amount to repay the bonds by $1,084,000.”

With that in mind, Farrell writes, “The City will amend its Financial Policies and Procedures to require that if and when Capital Campaign funds raised by a subsidiary fall short of the amount to fully pay debt obligations,” the City Manager be told within 30 days–and the subsidiary (such as, for instance, the Museum of Art) “submit a Corrective Action Plan within 90 days to the City Manager.”

To ensure in future similar situations, that funds earmarked for debt service aren’t spent in other ways, Farrell notes that the city “will amend its Financial Policies and Procedures” to require all such funds be deposited in a separate trust account requiring written city permission for withdrawal.

And then there’s this:

“The Audit raised one conflict of interest issue that City Management believes is overstated,” Farrell writes. “The Audit states ‘the Foundation was unable to locate any written documentation evidencing disclosure by the then-Board president that the construction company owned by her spouse was contracted to perform a small portion of construction on the Foundation expansion project.’ ”

Farrell has this to say about that: “The work performed was on the installation of a fountain for which no other bids were submitted. The value of construction was approximately $60,000, a very small part of the Foundation expansion project.”

Really? Sixty thousand dollars is small? I guess it’s all relative.

Farrell continues: “The Foundation will ensure that any future construction contracts, no matter the value, will be fully documented.”

And, of course, the second half of the audit is on the way in July.

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Viewing 17 Comments

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    Oh, good! Your next installment will, no doubt, cover the history of indictments, prosecutions, and prison terms handed down. I can't wait to read about how many of these criminals have been forced to pay their debt to society!
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    Mr Douglas could emphasize that the CURRENT Foundation management informed the City of their concerns regarding the prior management of the Capital Campaign funds. Current management, both Foundation and staff, alongside the City's Auditing personnel, have worked toward the compiling of this report. Readers of the PDF file can determine more carefully the picture reported by the Audit team. Please do not loose sight of the beautiful, valuable and important resource to your community that is the Long Beach Museum of Art.
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    Loves Art, I totally agree with you. Long Beach Museum of Art is an incredibly beautiful, valuable and important resource to the city, and I absolutely do not want anyone in Long Beach to lose sight of that.

    As for actions of the current Foundation management, why don't I close with this excerpt from the City Auditor's office's new audit of the museum:

    "In early 2007, current Foundation management informed City management that there may have been a misuse of Capital Campaign funds by the Foundation's previous management and that there were insufficient Capital Campaign funds to repay the Bonds due to mature in 2009. This communication ultimately resulted in our audit of the Foundation's Capital Campaign."

    And here's a statement from City Auditor Laura Doud, found in yesterday's press release announcing the audit's arrival:

    "Additionally, it is extremely important to note that the Foundation brought in new management in November 2006 and that controls are being put in place to ensure that the problems identified in this report do not happen again.”
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    Perhaps it should be pointed out that the current director was President of the Board before being "promoted" to the role of Director of Development, before being "promoted" to the Director position?
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    This just shows you how impoverished of imagination the local art scene is.

    What needs to happen is for the management under investigation to organize as a teachers union, hire Gerrie Schipske as its legal counsel and offer to buy her all the campaign posters she wants for her next election.

    This strategy worked at TALB, where much of the same kind of activity took place (according to the California Teachers Association's internal audit), but where no criminal investigation has been launched.

    Thousands of local teachers are still wondering how much of their dues were misappropriated by management there. Maybe none, maybe a boatload.

    I bet Gerrie knows--but she ain't talkin'.

    See how it works?
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    The mayor and a few select city councilmembers will probably seek help from the philanthropic, business and labor interest in town to help bail the museum out. They'll probably want to resturcture the board to build in more fiscal accountability. I must say, City Auditor Laura Doud is restoring the concept of no nonsense governance by producing results. She should be considered as a viable contender for Mayor in two years when Foster abandons Long Beach for bigger stage in politics.
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    Dear D. Peeve -- one shouldn't attempt to talk about what one knows little. The financial audit of TALB showed no malfeasance and certainly nothing criminal. Facts that were communicated to the press and to TALB members.

    As to TALB buying campaign posters: members' dues cannot be used for political expenses. Any monies used to help any political candidate have to be (and were) paid out of the PAC funds which are separate and voluntarily contributed. TALB has always endorsed my candidacy for public office before and while I was employed by TALB. Like other city council members, assembly candidates and state senate candidates endorsed and supported by TALB, I had to go through PAC interview to win the endorsement. I was then endorsed by 250+ member Representative Council and the 15 Member Board of Directors. If you have any questions, kindly forward them to CTA.
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    You know, the businesses who belong to randy whoredons union are the ones who should really be pissed, having their dues wasted on the (failed) ellis signature gathering escapade, then being shamelessly b.s.'d that "all is well-job well done" when randy slithered away from the recall fiasco.
    I bet randy could elaborate, but he ain't talkin'.
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    LB Voter (#6 above):
    foster is done. In the LB version of the Clean Trucks program, he bent over for the trucking special interests to avoid a lawsuit, breaking away from LA which stuck with their viable plan, and guess what? LB still is getting sued! What a nimwit. He deserves to stay in long beach where he fits in with the museum, queen mary, animal control, aquarium and other ridiculous shenanigans.
    The only person he probably made happy is the unofficial mayor of long beach, randy whoredon, who probably told foster what do do in this instance.
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    In honor of my favorite Caller of Bullshit, here are The Seven Words You Can't Say to Describe the Audit of TALB Management While G. Schipske Served As Legal Counsel:

    1) INDEPENDENT -- The audit was arranged and paid for by either TALB or the California Teachers Association. In Law School 101 and Journalism School 101, these are known as "interested parties," those who would benefit from having an audit turn out a certain way. Interested parties are not automatically good sources of credible information. An investigation by law enforcement or an independent regulatory agency could be seen as independent and would be more credible. This has not yet occurred.

    2) LAUDATORY -- Compromised as it was by direct union sponsorship, the audit concluded (if memory of press reports serves) that there was "egregious" management behavior. EGREGIOUS, as in "conspicuously bad." I could be wrong, but I believe press reports included such details as management personnel writing checks to themselves, critical financial records going missing (wonder where they went . . . ), and so on. The union-sponsored audit did conclude, however, that such actions did not rise to the level of criminality. Maybe Gerrie Schipske thinks this means the audit gave management a clean bill of health. Those of us in a reality-based world might think the audit actually said management was conspicuously bad, and accounts certainly left the impression that worse behavior could have occurred but could not be documented or proven in a court of law due to those pesky records going missing.

    3 & 4) FULLY DISCLOSED -- As far as I recall, all media reporting of the audit results was based entirely on interviews of the CTA trustee brought in to assume control of a union waylaid by egregious management. I don't recall a single news story actually quoting from an audit report. They were all based on quotes attributed to a very interested party -- the CTA trustee. While this is egregious journalism (and I'm talking primarily about the P-T here, I don't think The District was following the story), it was also, on the face of it, superlative media management by the trustee who was faced with having to turn around some egregious union management. "You want to SEE the audit report? Sorry, no can do. But, hey, let me tell you about it . . ." Anyone else see a problem with this?

    5) EXONERATING -- Word on the street says the audit didn't even bother to name names, just referred to "management" as the target of its investigation. So here's the beauty part -- as long as there is more than one person working as management, anyone in management can claim exoneration: "Wasn't me," you say. Fact is, this is how I keep alive my flicker of belief in Gerrie Schipske as a politician of some occasional courage and value. i see her take some courageous stands on the Council from time to time and it's hard to square that sense of her with these accounts of egregious union management. But still -- is it exonerating to stand tall and say "Yes, I was a party to conspicuously bad management?"

    6) PUBLIC -- I'm not sure about this one, but -- has this audit been made public? or even available to the media? As I mentioned, I don't think a single news account acknowledged the reporter actually receiving such a document. CALLING WILL SWAIM -- thousands of honest, credible, fair-minded local teachers could be the best ambassadors The District will ever have if they can count on you to give them the first unbiased account of what actually took place. They haven't gotten that account yet. I understand that this story may be a few months past its expiration date, but couldn't you just report what happens when you look up the P-T stories and request this audit report and see if it squares more with my understanding of events or more with Gerrie Schipske's clean-bill-of-health pronouncement? I'd trust your judgement. News of such an honest accounting would sweep through the schools in the city and make The District a household name.

    7) IGNORANT -- oops, this is actually a word Gerrie Schipske might have used to describe ME! Sorry, my bad.

    7) FORTHRIGHT -- unless you believe "audit" should be defined as a non-independent, non-laudatory, non-fully disclosing, non-exonerating, non-public report of an "investigation" of suspect behavior.

    You know, Gerrie, there are many passionate defenders of teacher unionism who believe that teacher unionism's greatest enemies are corrupt, venal, incompetent, asleep-at-the-switch, or egregious teacher union officials who try to sweep crappy union behavior under the rug. And we actually need to let the world know about them -- 'cuz they make organized labor and teachers look bad and lose influence when we protect them.

    And God help us all if unions disappear.

    Ignorantly yours,

    D.

    . . . and rest in peace, George Denis Patrick Carlin. The world needs more, not less, of your generous spirit, moral clarity, and joyous outrage.
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    now that's what i call a comment
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    D--never called you "ignorant" just not informed. I would suggest that if anyone has any questions concerning TALB, the audit, the findings regarding the Executive Director or any other aspect of the union's operation, that he/she should contact Barbara Kerr, CTA Trustee or Michael Day, President of TALB.
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    Hey Peeve, let's get to a very important topic of major consequence. I'm not saying the Teachers aren't important, but there's only a few thousand of them, compared to the hundreds of thousands of Long Beach residents, and thousands upon thousands of Long Beach schoolchildren. We need some info about the chamber of whores pac. I am especially interested in learning specifically which businesses are involved in fighting the ports anti-pollution legislation, reduceable pollution that is poisoning our Long Beach schoolchildren. Think about it; the chamber of whores fights legislation that would add a few pennies to the cost of a pair of tennis shoes but in turn would prevent and/or reduce serious health problems of Long Beach schoolchildren. It's almost unbelievable, especially when the chamber of whores claims to be concerned about our schoolchildren.
    One can only assume that the businesses who pay dues to gordons union support this unhealthy anti-schoolchildren program. Speaking for myself, I can not support any business who goes along with this disgusting scheme. Next I guess gordon will be promoting chips and sodas in LBUSD cafeterias. How about selling cigarettes to 18 and over students in our high schools?
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    Gerrie,

    I hear your continuing, deafening silence on this issue. I'm feeling charitable, so I will understand from your second post here that you are probably barred, legally or politically, from commenting more directly on this sad chapter in Long Beach union history and want to move on.

    I'm all in favor of moving on, though I think the closing of the ranks that follows most union decision making is, in general, a mistake that will take unions to lesser power, not more. I think this is especially true of teachers unions, which organize those who, at the height of their skills and talents, are demonstrating, extolling and instilling in our young people the capacity for independent critical thought. My two cents.

    (From Webster's) "IGNORANT -- lacking knowledge, information or awareness about something in particular." Gerrie, you didn't use the word itself (didn't say you did), but that's precisely how you attempted to characterize me.

    On a happier note, I understand that the current interim executive director at TALB is a reportedly stand-up guy with sensible ideas about the effective deployment of union power for maximum benefit of the membership. Funny thing -- I don't think I've read a profile of him yet. Did I miss one in any Long Beach news outlets? I'd be interested in learning more about the guy -- I've heard he has a very interesting background.

    (End of thread hijack)
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    And John,

    You should really talk to Bill Pearl, who runs LBReport.com. He is God's Own Bulldog on the subject of westside particulate polution. If anyone can help you get the facts you want, he can.
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    I for one am happy to remain ignorant on the Teachers internal union issues. I'm not a Teacher, it's none of my business, so I stay out of it. It's a good thing for other non-Teachers to do, also, especially ones that don't know much about what they speak. If they are a Teacher then the proper forum is probably a union meeting where they could hopefully learn something, as well as submit their input.
    What is my business, as I reside and do business in Long Beach, have relatives attending LBUSD schools, and breathe polluted port air daily, is the issue of the business-union boss who claims he cares about our schoolchildren yet uses his unions money and power to fight reasonable legislation. Legislation that would greatly help not only our schoolchildren, but all area residents, especially the weakest. Widely recognized for talking out of both sides of his mouth, he, to quote doug krikorian, has always been "annoying", but this remarkable behaviour proves him truly despicable.
    I would not pay dues to this guy, nor would I want him to speak for me. Shame on those who do. They can't be unaware of what this fool is doing.
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    I hear the bird cage liner is printing pro museum (and pro aquarium) articles like crazy.
    I don't know that for a fact, since I refuse to subscribe; in fact I barely even look for a "used" paper at work. The Times and the online news works just fine, and even being a 44 year ex-reader of the IPT I could care less about it!
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