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All Palo Alto 'Friends' groups targeted for review

Original post made on Jun 14, 2008

As part of the spiraling Palo Alto Children's Theatre controversy, the community's many "Friends" groups -- non-profit support organizations for city programs -- will soon face scrutiny to check on how they handle funds, the Weekly has learned.

Read the full story here Web Link posted Saturday, June 14, 2008, 7:08 AM

Comments (22)

Posted by Parent, a resident of Another Palo Alto neighborhood
on Jun 14, 2008 at 8:50 am

Good idea.

Some type of oversight on all of these are a great idea. There is nothing wrong with an over-enthusiastic bunch of people getting involved. Just sometimes, they might do something wrong in their zeal to help.


Posted by A Concerned Reader, a resident of Community Center
on Jun 14, 2008 at 11:47 am

The title of this article seems to cast an ugly insinuation over the many wonderful friends groups this town is blessed to have. My understanding is that these are independent fundraising organizations not under the city's control, and as such, would not themselves be subject the city manager's review.

The text of this article suggests that what this audit will be looking at is how the city interacts with the friends groups, and whether there is any inappropriate action being taken by the city itself. ("That accountant or auditor will be instructed to 'review agreements with outside non-profit 'Friends' groups and evaluate whether appropriate financial controls exist within these agreements.'" - presumably on the city's par.) But the headline seems to imply something more.

I'm sure that any independent audit of any of the various friends groups would show what we all know to be true: that they raise millions of dollars in private donations that benefit us all, and that they exist only due to the thousands of hours of time donated - not paid for, but donated - by the various friends' board members and others in the name of causes they are passionate about. But it's not the city manager's place to conduct that audit. Please, let's be careful not to let more names be dragged through the mud based on innuendo and unsubstantiated allegations presented as fact in the same way the names of the theater staff have been.

It does seem clear that a closer investigation into whether CITY operations have lacked appropriate controls is in order. One has to ask, though, if the city manager, who was ultimately responsible for whatever the city has or hasn't done here, is the appropriate person to be directing it.


Posted by Who else, a resident of another community
on Jun 14, 2008 at 11:58 am

Why not Friends of the Parks and
Friends of Lytton Plaza?


Posted by Kate, a resident of Crescent Park
on Jun 14, 2008 at 12:13 pm

I think it's a great idea, but it should be more inclusive. ALL organizations that receive public funds should be audited. I don't know if the groups that support and attract homeless individuals to Palo Alto are audited, but they should also be included. There should be no exemptions for review. It's the only way to be fair and even-handed towards everyone.


Posted by Volunteer Citizen, a resident of Crescent Park
on Jun 14, 2008 at 1:15 pm

What I think would be most helpful is if all of the support groups for various Palo Alto programs inform the community how many volunteer hours are spent, the amount of funds they raise each year, and the supplies, books, equipment etc. purchased with these funds. The school district does not audit PTA fund raising and expenditures because PTAs are independent, as is the Foundation for Education. Public funds should not be spent to audit support groups. It isn't appropriate. But it would be good "PR" for the groups to pat themselves on the back a bit more than they do and tell the public about their valuable activities. It looks rather ungracious for the City Manager not to simply say thank you rather than implying that the groups do something wrong..


Posted by William, a resident of Charleston Meadows
on Jun 14, 2008 at 2:33 pm

> The school district does not audit PTA fund raising and
> expenditures because PTAs are independent, as is the Foundation for
> Education.

The School District does not give these organizations money, either.

Both of these groups do file IRS Form 990s, however--which are public documents.


Posted by Point IN not out, a resident of Midtown
on Jun 14, 2008 at 3:43 pm

The city manager is pointing OUT at external organizations rather than IN, at his lax management of city funds.


Posted by Grandma, a resident of Another Palo Alto neighborhood
on Jun 15, 2008 at 7:39 am

The City gives the School District over $6 Million each year as part of the Terman/Cubberley-Ventura exchange of property. Maybe the School District should be audited. Let's find out what they spend that $6 Million on.


Posted by wow, a resident of Barron Park
on Jun 15, 2008 at 9:59 am

I agree with "Concerned Reader".

Article strongly implies Friends groups are under review. How can they be subject to review by the City since they are not part of the city? The only things being targeted are the agreements between the city's various depts and the Friends groups, as well as the cash procedures used by the City.

The Friends groups themselves cannot be "investigated" by the city since city has no jurisdiction over Friends group unless a crime is suspected.


Posted by Audits, a resident of Community Center
on Jun 15, 2008 at 10:46 am

The volunteers will feel a lot more comfortable when they are assured the funds are handled correctly. Currently they feel they are working for deceptive organizations.

It is a no brainer OVERSIGHT IS A MUST.




Posted by Bye Bye Palo Alto, a resident of Terman Middle School
on Jun 16, 2008 at 7:33 am

Palo Alto is just going down the tubes, and kicking itself in the teeth all at the same time.

No one will want to "volunteer" anymore, further more who would want to work for a City that treated its dedicated Staff and Volunteers so poorly.


Posted by Community Volunteer, a resident of Greenmeadow
on Jun 16, 2008 at 7:36 am

It seems to me that unless the City has an arrangement of regularly donating tax money to a group, the City has no standing to audit an independent organization. The Boy Scouts use a City facility at Lucie Stern. But the City does not audit them or even force them to change their policies on gays..If Friends of the Library meet at a library, the purpose is to find ways of donating to libraries to enhance city efforts. Why waste City money paying for an auditor? The money could be spent for books or for expanding library hours.
The same goes for other "Friends of.." groups.
The City Manager seems to want to shift the focus from the city's poor management to the volunteer groups who give much to this city. If his purpose is to put an end to support groups, why???


Posted by William, a resident of Charleston Meadows
on Jun 16, 2008 at 8:39 am

> The City gives the School District over $6 Million each
> year as part of the Terman/Cubberley-Ventura
> exchange of property. Maybe the School District should be
> audited. Let's find out what they spend that $6 Million on.

This comment is so wrong that it hardly deserves comment--but so many people know so little about local government that these kinds of statements pop up from time-to-time.

The City of Palo Alto does not "give" the school district $6M a year for Cubberley. It leases the property for about $4.5M. This is a legal contractual arrangement between the City and the school district. What the school district does with this money is of no concern (legally or otherwise) to the City.

The money goes into the school district's general fund, in a section reserved for real estate income. As such, it is an "unrestricted" revenue--meaning it can be spent on anything from paying higher teacher salaries to fixing up buildings.
If there were to be an audit--the school district would be the initiating party.


Posted by dave, a resident of Downtown North
on Jun 16, 2008 at 12:18 pm

If the city gives taxpayer money to a group (whatever it is called), then the city has an obligation and right to learn how that money is handled. If no city money is involved, it should not demand audits.

Well-run organizations will have good procedures for handling and accounting for funds no matter where the money comes from. Within the organization one would expect that members/volunteers have a collegial right to ask for an accounting if they choose.


Posted by Artie Kay, a resident of Charleston Meadows
on Jun 16, 2008 at 12:29 pm

Enough is enough! The Children's Theatre group is completely innocent. Let's look into the Police Dept. How and why are these high salaries justified? This can of worms now points to the police!


Posted by Senor Blogger, a resident of Palo Verde
on Jun 16, 2008 at 12:42 pm

Becky,
Please "link" or "Reprint" the City announcement for all to read. I do not accept your "Condensed" version.
SB


Posted by Becky Trout, Palo Alto Weekly staff writer
on Jun 16, 2008 at 1:33 pm

Becky Trout is a registered user.

Hi Senor Blogger,

It is at: Web Link

Thanks,

Becky


Posted by Senor Blogger, a resident of Palo Verde
on Jun 16, 2008 at 1:46 pm

THX,
So, the City is reviewing it's own procedures, in lieu of having a City Auditor, at this time. :)
SB


Posted by Herb Borock, a resident of Professorville
on Jun 16, 2008 at 3:36 pm

The Scope of Services in the Request for Proposal for Review of Cash Handling Procedures says,

"Review agreements with outside non-profit "Friends" groups and evaluate whether appropriate financial controls exist within these agreements. ... Part of this review will include an evaluation of remittances and where these are submitted within the City organization."

Article IV, Section 12 of the Palo Alto Charter says,

"It shall be the duty of the city auditor to ensure that the city departments and officers responsible for accounting and financial management activities comply with statutory requirements and accounting standards. It shall be the duty of the auditor to conduct internal audits of all the fiscal transactions of the city including, but not limited to, the examination and analysis of fiscal procedures and the examination, checking, and verification of accounts and expenditures; and the city auditor shall provide other analyses of financial and operating data as directed by the city council. The city auditor shall conduct internal audits in accordance with a schedule approved by the city council and may conduct unscheduled audits from time to time. The results of these audits shall be reported in writing to the city council and the city manager. In addition, the auditor shall have such other duties as the council may by ordinance direct."

Article III, Section 20 of the Palo Alto Charter says,

"The council may, by ordinance, assign additional duties and powers to officers, departments, commissions, and boards provided in this charter, or may reassign functions from one office to another, or may combine in one office the powers and duties of another office, provided that the offices of city manager and auditor may not be combined and that an office to which the manager makes the appointment shall not be combined with one to which the appointment is made by the council."

The Request for Proposal for Review of Cash Handling Procedures appears to be an audit function that is the responsibility of the City Auditor and cannot be done by the City Manager or even assigned to the City Manager by the City Council.

Frank Benest does not have the authority to audit himself.


Posted by William, a resident of Charleston Meadows
on Jun 16, 2008 at 3:44 pm

> "It shall be the duty of the city auditor to ensure that the city
> departments and officers responsible for accounting and financial
> management activities comply with statutory requirements and
> accounting standards.

This language does not preclude the City Manager from seeking outside assistance in reviewing the cash handling procedures of the City's Departments. The outside financial audit usually reviews cash handling, in spite of the Charter's language.

However--this language does illuminate the failure of the previous Auditor to review these operations.


Posted by Carl King, a resident of Duveneck/St. Francis
on Jun 16, 2008 at 6:29 pm

Sunshine is good, and is a positive step on the path forward. Rather than scaring off "Friends" volunteers, it should be encouraging that a sound framework is in place to avoid being drawn into any future financial scandals and conflicts of interest. As we depend more on Friends groups, we need clarity of policy. For example, we have had soccer groups give money to fields maintenance. We need to be clear about what, if any, benefits that group should receive over other user groups who have not contributed.
The Children's Theater situation, in which it does not seem as if policies and procedures regarding the flow of goods and funds between the City and the Friends, specifically around costume sales, and possibly (I don't fully have a grasp of how these were funded) around the use and reimbursement of funds for program trips of participating youth and City staff, were clearly defined such that all stakeholders are in agreement. It is time to dust off and examine any existing agreements and policies with outside groups, and where lacking or where they might be improved, make needed changes and insure a viable template exists for use across all "Friends" organizations. The lack of proper financial controls within the city relative to the Children's Theatre staff is a separate matter, but if policy and procedures had been clear and properly implemented internally with staff, and externally with the Friends group, the Children's Theatre investigation would likely never have taken place.


Posted by Carl King, a resident of Duveneck/St. Francis
on Jun 16, 2008 at 6:58 pm

Sunshine is good, and is a positive step on the path forward. Rather than scaring off "Friends" volunteers, it should be encouraging that a sound framework is in place to avoid being drawn into any future financial scandals and conflicts of interest. As we depend more on Friends groups, we need clarity of policy. For example, we have had soccer groups give money to fields maintenance. We need to be clear about what, if any, benefits that group should receive over other user groups who have not contributed.
The Children's Theater situation, in which it does not seem as if policies and procedures regarding the flow of goods and funds between the City and the Friends, specifically around costume sales, and possibly (I don't fully have a grasp of how these were funded) around the use and reimbursement of funds for program trips of participating youth and City staff, were clearly defined such that all stakeholders are in agreement. It is time to dust off and examine any existing agreements and policies with outside groups, and where lacking or where they might be improved, make needed changes and insure a viable template exists for use across all "Friends" organizations. The lack of proper financial controls within the city relative to the Children's Theatre staff is a separate matter, but if policy and procedures had been clear and properly implemented internally with staff, and externally with the Friends group, the Children's Theatre investigation would likely never have taken place.


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