Thomas Breen file photo
At a 2019 Financial Review & Audit Commission (FRAC) meeting at City Hall.
The following opinion essay was submitted by Dennis Serfilippi, a certified public accountant who works as a chief financial officer consulting for early- and late-stage technology companies.
New Haven is flush with $188 million in funding — $115 million from the feds, $50 million from the state, $10 million from Yale, and a $13 million tax increase.
Yet, the city’s sole independent financial body, the Financial Review and Audit Commission (FRAC), lies dormant and without a chairperson. And when FRAC was active, it was operating largely in violation of the city charter.
FRAC has not met for almost a year, since March 29, 2022. At that meeting, then-Chair Mohit Agrawal announced his resignation but provided no guidance as to the future of the commission. And the city’s website isn’t much help; the FRAC webpage displays Mohit Agrawal as chair, the late Joe Dolan as a commission member, and the names, but no professional or qualifying information, of the four (presumably) remaining members – three of the four have expired terms. [Editor’s note: The city has subsequently updated the FRAC website to reflect the names of current commission members.]
As worrisome as this is, the most troubling aspect of FRAC is its failure to execute on its core function as established by the charter.
With respect to the Financial Review and Audit Commission, the charter reads: “Not later than the tenth (10th) day of each month, the commission shall submit a report to the Mayor and the Board of Alders containing such comments and recommendations concerning the financial report issued by the Mayor during the preceding month pursuant to §5 of Article VIII of this Charter and the City’s financial condition as the commission may deem appropriate.”
However, not once in at least the last four years has FRAC submitted any report, or comments and recommendations to the Mayor or Board of Alders.
Further, when FRAC was active it was operating without bylaws, and without the required nine members. The City and FRAC are well aware of these deficiencies. I raised all of these issues when I applied to the commission in January 2020, and I re-iterated my concerns at the August 2021 FRAC meeting. During that meeting, the chair acknowledged the commission had not been issuing reports during his tenure. And when asked about members’ attendance at prior meetings, the chair also acknowledged that it had not kept any record of past attendance by FRAC members.
To his credit, the FRAC chair took responsibility for failing to execute on the commission’s core mission, and promised to do better.
But when the October 2021 FRAC meeting was held (the September 2021 meeting was canceled), the only thing that changed were the rules for participating at the meeting; the commission changed the meeting rules in a way that limited public comment.
A properly functioning FRAC is critical to the financial future of New Haven. As of June 30, 2021, the last year for which an audit has been completed, the City of New Haven has approximately $2.5 billion in unfunded liabilities; $866 million of unfunded pensions; $828 million of Other Post-Employment Benefit Plan liabilities; and $625 million of general obligation bonds. In addition, the city manages ~$1.3 billion in financial activity ($633 million in revenue, $633 million in expenses, and $60 million in capital projects) each fiscal year (Pages 1 and 90 of the monthly financial report.)
Absent FRAC, financial oversight and management is limited to the Board of Alders Finance Committee, none of whom (to my knowledge) has an accounting background, and a handful of city officials. Unfortunately, two of the most important city financial positions, Controller and Tax Assessor, are staffed by “acting” officials who are non-residents – a clear violation of the charter. Worse, the Controller and Budget Director roles are held by the same person, which significantly increases risk by eliminating the segregation of duties that would ordinarily occur between the two functions. The City can and should do better.
The City should address the FRAC deficiencies immediately, and a good place to begin is to resume meeting and appoint a chairperson. The next chair, unlike the last, should be a New Haven homeowner — someone with “skin in the game”, and a CPA.
I have invited the four candidates for mayor to address FRAC and the city’s finances in general at a public meeting to be held this spring. The meeting will be similar to the one held in 2019.
Stay tuned.
Editor’s Note: City spokesperson Lenny Speiller confirmed for the Independent that FRAC’s last meeting was indeed on March 29, 2022, which is when FRAC’s then-Chair Mohit Agrawal resigned because he was moving out of state.
“Multiple attempts have been made to schedule FRAC meetings with the remaining committee members, however scheduling conflicts among the members and city staff have prevented meetings from being scheduled,” Speiller told the Independent.
He said that the next FRAC meeting is tentatively scheduled for Feb. 6. at 6p.m.
Justin Elicker ran on a campaign to "clean up" the financial errors of the Harp administration (or the poor leadership that he claimed was occurring).
Since then, he's failed to convene the City's financial oversight committee, for three years he has left vacant the position of City Controller (the accountability and oversight staff for hundreds of millions of local, state, and now federal funding streams), and he kept Harp's Budget Chief, pictured above (as well as Harp's Chief of Staff and Harp's Economic Development Administrator and Harp's City Assessor and...). For transparency, the website isn't any better updated or accurate, the City's financial reports are in the same format and timing as the last administration, and the public check register and budget transparency promised by the transition team have never materialized.
The spokesperson says that a meeting is scheduled for February 6th, but neither that information nor any other meeting dates are not listed on the City's public meeting schedule, the BOA calendar, or the FRAC website page.
In response to this article, it seems City staff have updated the website to reflect the two vacant seats that Dennis mentions, but three of the four remaining members had their terms expire over 18 months ago (which may explain their scheduling challenges). Replacing them doesn't seem to have been a priority of this Mayor?
So, what has changed?