Councilmember Stone said the F-word!

The current issue of Synthesis Weekly includes an article by Sara Calvosa entitled “Caper Acres Chain Gang: An Interview with Randall Stone,” in which the Councilmember discusses City business, including convicts working in Caper Acres and the deficit in the Capital Projects Fund (Fund 400).

Before we get into the meat of this post, we want you to know that we follow Sara on Twitter (@scalvosa) and find her City Council posts hilarious. A favorite of ours was during the meeting of August 20, when she tweeted, “Gruendl is rambling gibberish at this point. He needs to get back into his sarcophagus. #mayorkingtut”

We also laughed when we saw Stone’s Facebook post about the interview, a photo of which a friend emailed to us just before the post was deleted. (Serendipitous, indeed!) Perhaps he removed it after considering the potential of us seeing it and using it to mock his pretentiousness? We would never…


Having said that, we do take issue with some of Stone’s “cavalier responses” on the Fund 400 budget and will be correcting his misstatements in this post.

It isn’t particularly that we don’t sympathize with him for not understanding the Fund 400 budget; municipal finance is very complicated. Our concern is that he goes out in public and talks as though he has it mastered.

Here’s part of what he said in the interview:

The Big Ugly here is that we—not me, I wasn’t on the council [then]—were being told, and certain departments were reporting that we were in such-and-such a condition and that we were making necessary cuts. But in reality that wasn’t what we were doing. And I think you’re going to find that the audit reports that too. I don’t know how and why—you couldn’t, shouldn’t, and wouldn’t have known as a staffer that what was going on there was apropos. It’s outrageous. 

The prior years’ budgets clearly show the cuts were made; there is no question about that. If there is a problem with prior audits to be revealed in the new-and-improved audit, Stone should talk with the City’s current Accounting Manager, Frank Fields, who has been responsible for audits for at least the past four years. We don’t understand anything else Stone said in that paragraph. And we don’t think he should be using grownup words like ‘apropos’ if he doesn’t know what they mean.

So, we book administrative time. We book overhead. Say employee A is going to be working on a project, some Capital Project. So staff works on it, and we say staff is going to have 10 hours on a Capital Project out of 40 hours of their week. We book staff-time of 10 hours that’s supposed to come out of the Capital Projects budget. Well, let’s say there’s only 5 hours worth of work in Capital Projects. We’ve billed 10 hours. That means that 5 hours has to come out of somewhere, and where does it come out? The General Fund. That’s how we incur a debt. So employee A shouldn’t have been billing 10 hours to Capital Projects.


Fund 400 has neither revenue nor expenses. It is a holding fund for costs. Those costs include direct charges to specific projects (including staff time, consultant costs, contractor payments, etc.) that are budgeted in various other City Funds; the former Capital Projects Services Department’s operating budget (such as office supplies, postage, and gasoline); direct overhead costs for support to the overall department (non-project specific salaries & benefits such as department head, clerical, and leave time); Internal Service Fund costs for direct support to the overall department (such as building maintenance, vehicle maintenance, insurance, and information services); and Citywide indirect overhead costs via the Cost Allocation Plan (CAP).

Capital Projects staff charges specific projects when working on them, and charges overhead when they are doing non-project specific work (such as attendance at staff meetings or training). The only circumstances under which their work would default as a fixed percentage of their time would be when they are on vacation, sick leave, etc.; and that time would be charged to overhead, not projects.

It’s fraud, really, when you do that. I mean, fraud is the wrong word because it’s an f-word… but what you’re doing is overbilling to a particular account.

Really? The f-word? These are all legitimate charges.

So we created work for staffers to work on things. 

There was no ‘created’ work. The 2nd floor as a whole lost 30% of its staff, that’s 22 bodies, during the two rounds of early retirements and other attrition. As part of the staffing workout plan, initially presented to the Council by former Assistant City Manager Rucker on June 15, 2010 (at 01:47:00 on the video) and again by former City Manager Burkland on June 21, 2011 (at 00:37:28 on the video), some remaining staff who had been working in areas that no longer had sufficient funding were transferred and cross-trained to pick up a portion of the workload resulting from the staffing reductions. We will be writing a separate post to describe exactly who went where, and what they were doing. Again, there was no ‘created’ work.

We were 2.5 million dollars in deficit, and now it turns out we were 3.3 million dollars in deficit because we can’t account for almost $800,000 of those 10-hour slots. So that has to be paid back from somewhere, and it always has to be paid back by the General Fund.

The Council approved Supplemental Appropriation No. 11-12 04 and adopted the FY 2012-13 Proposed Annual Budget on June 19, 2012. The agenda report and exhibits (SA 11-12 04) clearly called out the initial policy decision to allow Fund 400 to carry the fiscal year end negative balance of $1,116,300 into the new budget year.

Ten-hour slots have absolutely nothing to do with the increase in the Fund 400 deficit. This is not the time to climb into the weeds on this topic, so suffice it to say for now that with each dollar of gas tax or transportation funding that is shifted away from Capital Projects and used instead for General Services operations (e.g., street crews), the likelihood of Fund 400 ending in a negative position increases.  In the coming weeks, we will provide a detailed explanation of the relationship between project actuals and overhead allocations, as well as capital versus operating budgets. (Whee.)

If there is an additional $2.2m unaccounted for at fiscal year end 2012-13, Stone should discuss it further with Mr. Constantin and his budget experts. Or he could reach out to us; we can explain it.

That type of double billing, back billing, incorrect billing of hours… they asked me if I was surprised if this was the case and I said, yeah it was surprising, but I wasn’t shocked. I don’t know how you can be shocked.

The only thing that makes any sense above is the double billing, which had been City practice for at least 15 years. It only applied to certain staff charges that fall within the CAP, and until Mr. Rucker ‘abruptly retired’ in January, Mr. McKinley ‘mysteriously resigned’ in February, and Ms. Hennessy barely made it to the front door before Mr. Constantin came aboard in April, it was being aggressively addressed and unwound in coordination with additional structural changes to the budget.

No one was hiding it. In October 2012, Mary told Nakamura all about it during a 2-hour presentation on the issues surrounding the Private Development Fund. In mid-April, she made a similar presentation to Mr. Constantin, Mr. Orme, and Mr. Martinez. Mr. Wolfe was in attendance at both of those presentations, and he had known about the double billing since we began the funding analysis in March 2010.

The point is, no one should have been shocked about it, because everyone knew. This is another topic that deserves, and will receive, a separate post.

There are a few funds that are our big behemoths. If you’re looking at these [budgets] like they’re big rocks, and Fund 400 is one of those huge rocks—you see a whole bunch of crap going on with the General Fund, and you see a whole bunch of crap going on with the Redevelopment Agency—guess what’s gonna happen when you turn over that rock? We know Fund 400 is going to be messed up. When you have three cookie jars and one’s been stolen from, and you see a kid with chocolate all over his face and he says, “no I wasn’t in the cookie jar,” but it’s all over his hands and face, what do I think I’m going to see when I open up the other cookie jars? I’m guessing, yeah, they’re going to be taken from as well. So no, I was surprised, but I wasn’t shocked.

That sounds like a bunch of huge crappy rock cookies to us. ‘Stolen’ is an s-word he will surely regret.

We’re in crisis mode and we need to address the problems. The ship is going down and I’d rather get the ship back up, fill the holes, and make sure everyone has life rafts in case we do have to bail out. We’re not going to have to do that; we’re not going to declare bankruptcy, so that analogy is a little bit bad. But the ship is taking on water, and I can’t get into the mix about who/why/how right now; I’ve got to address Caper Acres. I’ve got to keep these things moving.

That analogy is a whole lot of bad. Not everyone will have life rafts, since the City has recently announced that a second round of layoffs is imminent; however, some folks will float away in yachts.


Posted on September 28, 2013, in Budget, Truth vs Lies and tagged , , , . Bookmark the permalink. 5 Comments.

  1. I can’t believe he doesn’t mention the $500,000 plus he approved for those upper management salary raises.

    • Yep, those darned yachts. Watch for a fiscal analysis of those shameful raises and the accompanying promotions of middle management staff to division head level in the coming days. These guys are the gift that keep on giving.

  2. I bought Jiffy Pop, keeps me from biting my fingernails during the scary parts.

  3. He manages to sound pretty clueless. As for using grownup words correctly….it seems he can’t even manage to make a distinction between “some things” and “somethings” (is that even a word??), much less complete his sentence properly. I know, I’m being snarky. I should stop.

  4. Randall Stone is a bull####ting con-artist

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