Hawthorne $ Dispute Is a Non-Dispute?

Dateline Hawthorne – In the midst of election season in this community of 88,000 where political turbulence is served at dinner tables as routinely as their daily bread, where the mayor is under fire so often some think he works for the Fire Dept., a new controversy is brewing, fueled by a candidate for mayor who poured gasoline on the latest flames.

According to an enterprise story this morning in the Daily Breeze – which has a feud going with Mayor Chris Brown – Hawthorne’s finances are in a tortured state designed to serve the electioneering purposes of mayoralty candidate Alex Vargas, a City Councilman.

But are they jumbled? Or is it a case of lack of fiscal sophistication by critics?

The headline on the lead story: “Officials question use of $8.6M – Mayor says nothing is amiss; reports show reserve fund declining,” hinted at potential foul fiscal play or at least too much secretiveness.

The hammer was dropped, the desired dramatic tone established, in the opening sentences:

“A confusing and sometimes contradictory series of financial statements has stirred concern at Hawthorne City Hall that the city’s finances might be distressed despite assurances from city leadership that there is no cause for concern. Finance reports show a fast-declining reserve savings balance since July. But city leaders haven’t fully explained what happened to $8.6 million in savings that should be in the 2014-15 fiscal year budget but isn’t delineated there. Instead, they say that the city is doing better financially than it has in years.”

The heart of the drummed-up dispute appears to be that the finance director reported widely varying reserve fund balances on three occasions:

•  $16.7 million last July
• $11.2 million last September
•  $7.9 million in March

What is up?

An important segment of the backstory to this flareup that apparently began with the newspaper is that Hawthorne, double the size of Culver City, went without a finance director for seven years. Bookkeeping, it has been implied, occasionally tended to be casual.

Last July, Rickey S. Manbahal was hired from Redondo Beach to bring order to a financial trunk that may have resembled your maiden aunt’s disheveled finances just before she was locked away.

Curiously the official at the center of the controversy was not interviewed by the Breeze for this critical story.

This newspaper caught up with Mr. Manbahal earlier this afternoon.

“The major confusion is the interpretation of reserve and fund balance,” said Mr. Manbahal. “I will give you a generic statement. Historically, the way the city has been reporting its reserve, it was a calculated reserve on a fund balance basis.

“They did not have a special set aside, let’s say a bank account, for reserve.”

Does that mean the city was dealing in estimates in the pre-Manbahal years rather than precise numbers?

“It was not even an estimate,” the finance director said. “They were using our operating fund balance, and then they were calculating that at 10 percent or 20 percent, whatever the fund balance was. That is what they would claim as a reserve.

“That should not be the case because the operating balance and the fund balance, they fluctuate from day to day as activities are posted,” Mr. Manbahal said.

“The headline this morning was, ‘What happened to the $8.6 million?’ Last June 30, we had a fund balance of $16.7 million. In August, it was not there because as I said, when activities are posted in and out, it changes, varies.”

Then Mr. Manbahal delivered his diplomatically carved, jackpot sealing line:

“In a nutshell, that is the big question. But it is not a big question because the interpretation and the understanding are not there.”

(To be continued)