The following letter was submitted by Hamilton resident, and retired public sector accountant, Shekar Chandrashekar, to City Council.
Chandrashekar has been tireless in his efforts to bring transparency to civic finances in all departments, and has recently been trying to get the public police account ledgers. The information is legally public, held by the City, and Chandrashekar has been denied access to the information.
Chandrashekar spoke to Council this morning, and submitted the following letter to Council to assist them in understanding the matter. Moved by Councillor A. Johnson, Councillors asked for a confidential staff report on the grounds for denying access to the information.
Date: January 13, 2017
Madam Chairperson and Members of AF&A Committee
As a private citizen and concerned taxpayer of Hamilton, I have been asking City staff to provide all accounting records, including those of police services that do not involve operational matters, based on approved facts and established policy. Nevertheless, city staff continues to shift their responsibility without following City Council authority. I am providing you with supporting documents showing protocols you have set up and other relevant material. I have received verbal confirmation from the Ministry of Municipal affairs that it is the City’s responsibility to provide information to a private citizen.
I ask that the A&A committee recommend that there be:
1) Easier access to accounting records when asked
2) Greater scrutiny by City finance as to the budget and actual costs of police services, and
3) Greater detail and disclosure in published City budget documents.
I humbly appeal to Mr. Mayor, Madam Chair and members of A & A to approve this recommendation. Please don’t just receive it. The City is a publically funded organization. It should be accountable. It should be transparent.
I have followed all possible protocols before submitting this appeal to you and your committee to recommend my request. Even though I am a former City of Hamilton employee, I find it challenging to deal with this runaround. How would a person who is not familiar with city financial transactions deal with it? It does not support the City Manager’s mission to supply customer service and provide public accountability.
My concern is that, as one administrator said, “Staff play politics”. In a publically funded organization, staff is there to provide unbiased actual information in order to facilitate decision making by elected representatives. As it stands, Councilors have difficulty posing the appropriate questions to staff in their efforts to protect tax payers’ interests. Per Council’s statement,” Why is accountability important to the City? It is to communicate effectively with the public to create a city where people come first”. But does staff follow this goal? Furthermore, City Council policy defines how to request FOI: “How do I access records in the custody and control of the City” and is clearly supported in the note to financial statements. But does staff follow Council policy or does staff follow their own interpretation of policy thereby undermining Council’s policy? This kind of staff politics is a burden costing millions of dollars to Hamilton taxpayers. Wages exceed budgeted amounts by over $1.2 M and sick leave and Vacation pay also significantly exceed budgeted amounts and there are others.
Police Services Concerns
Municipal Contribution to Police Services
KPMG Hamilton audited Police Services Schedule of Operations for the year ended December 31, 2015. Certain inaccurate financial information presented to the Police Services Board and City Council in KPMG’s report was not analyzed by Police Services and City staff. KPMG of Hamilton arbitrarily reduced the municipal contribution to police services operations by over $1.5 million without explaining the basis for the change in their note two of the Statement of Operations. The municipal contribution and actual contribution must be the same as per Levy By-Law 15-121 established by City Council as that is the amount of funding by Hamilton taxpayers to the operation of Hamilton Police Services. By reducing the municipal contribution, it not only it undermines City Council authority, it is misinforming Hamilton Taxpayers.
Pan Am Games
KPMG Hamilton did not audit Hamilton Police Services’ actual Pan Am game expenditures and receipts. They relied on and recognized Hamilton Police Services’ submission to the provincial Ministry. The provincial Ministry appointed Price Water house to audit all Ontario Police Services involved with hosting Pan Am activities. This raises questions;
Why didn’t Hamilton Police provide a presentation to their board stating actual Pan Am expenditures and receipts as did other police services boards?
Why didn’t Hamilton Police Services Board members demand that Pan Am game financial statements be presented to the Board and to the Public as did other Police services who hosted Pan Am Games?
KPMG Niagara audited Regional Police Services’ Statement of Operations for the year ended December 31, 2015. Their audit report is clearer, provides much more detail, and includes an audit of Pan Am games receipts and actual expenditures. Their Pan Am costs were reimbursed in the same amount as they expended without any additional receipts. The audit by KPMG Niagara was much more efficient for less than what KPMG of Hamilton charged.
I had contacted other Police Services who hosted Pan Am games, including Toronto Police Services, to determine whether they received receipts higher than actual expenditures. Their answers were “No”. Then the question is, should Hamilton Police Services be any different? I have obtained a ruling from the Ministry and Deputy Minister confirming that Hamilton Police submitted a claim for $2.7 million and received that amount. That amount is significantly higher than the actual expenditures recorded in their actual available funds report obtained through FOI. Hopefully there will be a follow up audit by Ontario Auditor General and there has been an FOI request to the province to provide details. The request has been approved and I am waiting for information. The Pan Am games were funded by Ontarians. This excess reimbursement should not be used to fund a Hamilton Forensic Building.
Police and City staffs have not analyzed the healthy reserves accumulated by Police Services. They are discretionary reserves. They could easily finance Forensic Building without issuing new debt. Why should taxpayers be burdened?
Police Services Salary Contingency Provision
The Police Association contract expired in 2012. Police Services set aside a contingency provision in each of the years 2013 to 2015 while a new contract was under negotiation. This provision has been a great concern of mine because although the amount of provision quoted in the annual budget memo to the PSB agrees with the amounts in Appendix “A”, the actual amount recorded in the accounting records is different, in particular, the 2015 contingency provision by over $3 million. These differences were brought to the attention of HPS accountants and some members of the PSB, including the Mayor, but no action has been taken. For a law enforcement organization to provide inaccurate information is regrettable.
The provision built up for contract settlement exceeded $12 million. The retro-pay resulting from the final settlement of the contract was approximately $9 million. KPMG Hamilton did not bring this excess to the attention of the Police Services board. The excess was written off during the year ended December 31, 2015, when the settlement was made and the excess went to surplus to finance the forensic building. KPMG said that no audit misstatement was identified in spite of the fact that the provision accumulated over the years in the budgets was far in excess of the cost of the settlement.
In my opinion, the Pan Am game reimbursement and the excess contract contingency provisions were preplanned to provide financing for a Forensic building because police services failed to obtain Provincial and Federal funding. The need for a Forensic building is not in question but the method of financing it is in question. As a law enforcement agency, they should go through proper channels. To build up a surplus at taxpayers’ expense in order to finance a Forensic building lacks accountability and transparency.
Furthermore, to say that issuing new debt has no impact on the tax levy is an inaccurate statement. The planned “new debt” is to replace previous debt that is coming due. Therefore, the previous debt that was a temporary commitment by Hamilton taxpayers is now extended.
Employment and Retirement Benefits
Some employment and retirement benefits for police services staff, in particular the chief and deputies are excessive and unreasonable. For example:
Employment contracts for the Police Chief and Deputies cite “exigencies” as a basis for indefinite vacation carryovers without defining what “exigencies” means. It permitted some deputies to carry forward 26 weeks of vacation. As a result, a former Deputy, now a civic employee, was paid over $128,000 in unused vacation time. Information on the basis for this accumulation
The same employee also received personal use of an employer supplied automobile as part of his retirement package. What he paid to police services was not disclosed to the public nor was the model or how many kilometers were used during employment.
The retirement package of the former Police Chief is of great concern and is going to be a third party complaint, in particular, the transferring to him, after retirement, of his office computer and cell phone containing information which he should no longer have at his disposal. The approval of this arrangement was not made by the entire PSB as one of the board members was absent during January and part of February, 2016
I obtained a copy of the Hamilton Fire Chief’s and Deputy Chief’s employment contracts and the retirement package for the former Fire Chief for purposes of comparing the contracts with those of the employment and retirement contracts of the police Chief and Deputy chief. There are vast differences.
HPS Chief and Deputies not only get department vehicles to use twenty-four seven, they also receive car allowances to offset any personal use payments to Police Services. Only Hamilton Police services are entitled to such generous benefits at taxpayers’ expense.
Hamilton Police Services staffs receive two weeks of additional vacation at the time of retirement. No other police services or municipalities provide such generous benefits. It is time to reconsider this in coming negotiations to eliminate such generous vacations at the expense of taxpayers.
In my opinion, it is a discredit to taxpayers that such generous allowances and benefits are granted to police chiefs and deputies.
2017 Police budget
At the December 15, 2016, PSB meeting, I observed that the Police Chief wore his black uniform to present the 2017 police operating budget. It is bleak indeed. Each year the budget is presented with the same slogan that the increase is so much lower than so many previous years. Is it really? Based on our observations that surpluses have resulted from previous budgets, how does the board assess whether a smaller percentage increase will still result in a surplus in 2017? From page one to the last page dealing with operational issues and required funding needed to operate, there is a tactic employed that I call allaying reality. How can they set up a budget without examining the actual expenditures incurred in the previous year on a line by line basis? How would the board members know if the budget is not padded? Don’t taxpayers have the right to know? Taxpayers are funding the operations. Shouldn’t HPS be accountable and transparent? City finance should play a larger role so PSB and Council as a whole can determine what is fair and transparent.
PSB member Councilor Whitehead was successful in reducing the 2017 budget by $114, 461 and associated benefits. I will provide further details regarding Councilor Whitehead‘s concern in my comments on the City budget. However, my concern still remains that Police can still reduce the 2017 budget by over $2 Million without reducing the service level and operations.
Another example of how police have padded their budget year in and year out is concerning funeral expenses. The need to have state funerals is not in question. It is appropriate to recognize those who have sacrificed their life for our country. In the past, two funerals costing over $375,000 have been financially absorbed without disclosing the costs to the PSB. I obtained the information through FOI. How did they finance them without adjusting the budget and reducing the surplus?
Over the years Hamilton Police Services had been operating in isolation without accountability and transparency. Employment contracts for the police chief and deputies should be written by City of Hamilton human resources not a Police Services legal counsel who reports directly to the Police Chief. Council and City finance should take a more active role. Times have changed. We are in a digital world. They find it difficult to adapt their autocratic operations without thinking it is to annihilate them. This is not true. The intention is to encourage them to adjust to a new thinking. I am saying that as a Hamiltonian who has followed our front line officers since 1965. Hamilton is a mosaic of 520,000 people. In my opinion, both Hamilton Police Services and Hamilton City Council must examine the composition of the Police Services Board and revise it to reflect the background of Hamiltonians. Having attended regular monthly PSB meetings for the past several years, I have not seen a single minority person holding the position of PSB member or in senior Police Services command. It is time to change that. The provincial government, who selects three members of each police services board, must pay attention to this issue.
City of Hamilton Concerns
Provision of Information through FOI
My sincerest thanks to Councilor Johnson for his frank discussions with me. I am concerned that city staff can sway a decision making body with incomplete or incorrect information. Councilor Johnson was informed by staff that the police have provided the documents I requested, in electronic form, and that I have requested the documents in paper form, and that the matter of whether you have a legal right to the documents in paper (as opposed to electronic form) is now at the appeal stage.
This version of the situation is entirely incorrect. I was only offered the information in paper form, never in electronic form. The issue now under appeal is the cost of the paper form which was offered to me.
Authority for Responding to FOI Requests Concerning Non-Operational Police Services Matters
It is clearly obvious that all Police accounting transactions go through the City and they are stored at City of Hamilton accounting. City of Hamilton’s responsibility for FOI extends to HPS accounting records,
Here are the actual facts, with supporting evidence, that the City not only controls Police accounting records but that actual transactions go through the City books. It is the City’s responsibility to release accounting information for all records it processes. As a concerned private citizen I should be making my FOI requests to the city and not to Police Services. The red tape and run around is frustrating to me, a veteran city employee. Imagine how the average citizen would feel? Is stonewalling considered good customer service?
The Municipal Act assigns responsibility for accounting transactions and the formulation of consolidated financial statements to the municipality whose responsibility also entails the submission to the province of their F.I.R. However, as an accountant, I believe the Municipality has the responsibility of police services accounting records for the following reasons:
The assets, liabilities, revenues and expenses of Police Services are "under the control of and accountable to Council"
Accounts Receivable and Accounts payable of Police Services are balance sheet accounts and they are recorded in City books.
Hamilton Police Services’ fixed assets and liabilities are in City books.
All police accounting transactions are processed though one city bank account
Police HST claims are filed by the City, and
The sunshine list, produced by City Payroll and signed by the City Manager, includes Police officers.
Senior Finance staff agreed with all the above points with the exception of two items. The senior staff person did not wish to comment on point 1, that is, whether the assets, liabilities, revenues and expenses of Police Services are "under the control of and accountable to Council” and With respect to point 4, the senior staff person stated “If your statement was changed to “a City Bank Account” rather than “one City bank account” then the answer would be yes”. I agree with the correction with respect to a City bank account, however, my assertion in point 1 is directly from the financial statements, Note 1, and from the Municipal Act. Furthermore, Senior Accounting Staff confirms that all police accounting transactions go through City books in the preparation of financial statements. He, however, does confirm that the City provides accounting services.
To sum up, it is abundantly confirmed that all Hamilton Police Services accounting records go through City books.
Examples of Inadequacies in City Information
Remuneration and travel expenses for Hamilton Police Services Board members:
Through an FOI request to Hamilton Police Services, I obtained an accounting of remuneration and travel expenses for the board members for the year 2013. The City had published the information in their report for the year 2013 as a provincial requirement. After reconciling the information and talking to one of the members of the PSB concerning a conference, it was apparent that there were significant differences between HPS and City numbers.
In an effort to reconcile the differences, I firstly talked to Police Services as I had been involved in the City side of the provincial requirement when I worked at the City. Police Services stated that, “City prepares those statements based on accounting records that flow through City books, not police.” Secondly, I spoke with the PSB member who went to the same conference and was not included in the information that I received through the Police Services FOI response. Thirdly, I contacted the City thinking that the City would submit an amended statement based on the information I received from HPS. It was necessary to amend that same statement for City Council once when I was an employee. No amendment was issued. I received an unpleasant email in response. This example shows a real disconnect between the records of Police and City Finance.
FOI request concerning funeral expenses: I obtained information concerning the City’s expenses for a funeral through FOI. The City’s cost was approximately $90,000. I was charged 20 cents for printing one sheet of information and $75 for search time for a total cost of $75.20. The one page printed was information easily available from accounting records and involved no search time.
Staff was to have recovered the funeral cost of approximately $90,000 but finance people forgot to claim. The former director of Communications was in touch with Federal representatives concerning this matter I do not know what came out of it.
Taxable Benefits for Police Chief and Deputies: I obtained manually prepared schedules concerning taxable benefits for Police Chief and Deputies through an FOI request from HPS. I also obtained the actual City Available funds Report (A.F.R.) The Chief and Deputies receive the use of departmental cars for twenty-four/seven. Any personal use should be reimbursed to HPS. In addition, they receive a car allowance. After reviewing Actual Funds Report (A.F.R.) reports for each year I cannot locate where those charges expensed or recovered. Since all police accounting records, including payroll, goes through City books, my questions are:
Which accounting records are charged? It appears that the City is absorbing these costs.
Why do they receive a car allowance? The City Fire Chief does not receive it.
The City manger receives a nominal car allowance because the City manager doesn’t have a departmental vehicle. That makes sense.
The City prepares a current budget each year with tax supporting documents and previous year comparative figures. It is an impressive document. These documents include details regarding departments, agencies and Boards. However, some important points are condensed such as full time employees (F.T.E.), organization charts and so forth. This condensed version of budget information would not help provide adequate information without having inside information to interpret them. Councilors may get details either through requests or other channels but the Public would be in the dark.
The City of Hamilton used to publish a detailed line budget that would allow the public and constituents a closer look at the City’s activities. It helped councilors defend their constituents’ concerns. Why has this been discontinued?
Nevertheless, Councilor Whitehead was successful at the PSB meeting on December 15, 2016, in reducing its 2017 financial operations budget by $114,461, plus associated benefits. I hope Councilor Whitehead will adopt the same fairness to the City Budget. One concern is why does the City needs 17 communication officers? Councilor Collins made a public statement to cut the labour force to balance the 2017 Budget short falls. That raises the following question: why did the City hire an external candidate for Manager of Accounting Services? Didn’t the City have any qualified internal candidates? I can name a few. This is another example of City Council being kept in the dark? There are many other instances where the City goes outside to hire when selecting an internal candidate would be appropriate. Through filling jobs internally, it could then be determined at what level not to replace, thereby reducing the workforce through attrition. HR and senior management should be working closely with each other and council to set reasonable targets and objectives if the goal is to reduce the workforce.
The purpose of this extensive and detailed presentation is to provide you with an insight into what a private citizen sees and experiences in his purpose to protect the taxpayers’ interest and to alleviate the tax burden at this critical time. Most Police Services have arrived at a 2017 budget that is less than their respective City Councils mandated including Toronto Police Services’ “Zero” increase. The City of Toronto Executive Committee is presenting to their council this month a proposal to amalgamate various functions with other boards and agencies including Toronto Police Services. This is what the City of Hamilton should be considering. I have mentioned this in the past but have encountered no response.
The City staff is so concerned about external enquiries that they attempt to discourage private citizens from obtaining information. There seems to be a strategy to force citizens to appeal to the IPC and Ombudsman. They should be concerned about millions of dollars that can be saved through efficiencies in an effort to help reduce the tax burden. For example, the Fraser Institute survey must be read. It found that public sector employees are paid more than private sector employees. In my opinion, the City doesn’t have a revenue problem; the City has an expenditure problem.
As a private citizen I am investing my own funds and time placing taxpayers’ interest first and I will continue to do so.
Respectfully submitted by a concerned private Citizen