The Schutze Audit

Imagine it this way. You own a vacant building. A guy wants to rent it for a business. You rent it to him for a percentage of his business revenue. But you never ask to see his business' books, cash register tapes, anything. You never even stroll by to see how he's doing. Every once in a while he brings you a check. You have no idea what it's based on. You take the check and tell him thank you.

In the Harvard Business School, they have a term for what you would be if you operated in this fashion: idiot.

But this is exactly how our city government operates every day.

In the last week, I have been carrying out my own one-man efficiency study of local government in Dallas. Think of me as the Uncertified Public Accounting Firm of Schutze, Himself and What's-it-to-you (SH&W). I went over to City Hall and did what the high-priced guys from Big Four accounting firms would do. I sampled the existing public documents to look for signs of a pattern. Tell me if you think I found one.

ITEM: Every year the city rents out facilities at Fair Park to the Southwest Celtic Music Association (SCMA) for its annual North Texas Irish Festival. The city is supposed to be paid 25 percent of gross revenues from the concessions at the festival. People are supposed to pay for everything with coupons. The city knows how many coupons it gives the SCMA before the festival. Counts the coupons it gets back. Knows how much money it is owed.

But an audit last year found that the city had failed to count the coupons before the festival. The major food concessionaire took coupons for some food sales but also sort of took cash. The SCMA itself sold booze for cash. Various small vendors sold stuff for cash. Or coupons. Whatever. Nobody had a cash register. The city didn't ask for register tapes, anyway. The city didn't even ask for the leftover coupons.

Auditors asked city employees if they had walked around to see if the concessions were doing a lot of business. City employees said they hadn't done that very much. Auditors asked how much. City employees said not since 1998.

Wow. That's really really not much.

Auditors asked how much money the SCMA had paid the city. City employees said not actually anything. YET. But the check was very likely in the mail. Auditors pointed out that payment was due 36 hours after the event and that six weeks had elapsed.

NOTE FROM ACCOUNTING FIRM OF SH&W: Six weeks is actually 1,008 hours.

A short time later, the SCMA sent over a check for $11,707.11. But there was no documentation to show what that amount was based on. Auditors had to point out to city employees that this was bogus. Soon afterward, the SCMA sent over another check for $3,054.78.

NOTE FROM ACCOUNTING FIRM OF SH&W: If you keep asking them for documentation and they keep sending you checks instead, this is not a good thing.

ITEM: Remember recently when the city manager said he had to cut benefits for cops and firemen injured in the line of duty? Then after there was an uproar, he "discovered" half a million bucks to help them out?

Well, here's an example of how this sort of thing could happen. For years the city manager had been whining about the increase in the cost of health benefits for city employees. But last year an audit found that an entire division of people in the city's human resources department--staff that had precious little to do with health benefits--was being paid out of the health benefits administration budget to the tune of more than half a million dollars a year.

In fact, there weren't supposed to be any city employees involved in health benefits administration, because that function had been out-sourced to private firms.

Why, when the city manager told the city council that health benefit costs were going up, did he not mention that he was pinching off half a million bucks a year in health benefits money for other operations? And why did the council not notice--even after the city auditor pointed it out?

SH&W NOTE: Scary thing about guys who miraculously "find" half a million bucks: They can just as miraculously lose it.

ITEM: We haven't been the victim of a bomb attack in this city, right? So what's with the craters all over the streets? A major cause of bad streets in Dallas is "street cuts" by utilities and construction companies--trenches and holes dug in the streets that never get repaired properly.

The city spends an average of $430,000 a year to support a staff of 11 employees including eight inspectors who do nothing but look for street cut violations. City code says you have to get a city permit to cut a street. You have to install a permanent repair--concrete on a concrete street--within 14 days after you finish your work.

When auditors looked at the street cut squad a couple of years ago, they found that in the first six months of 2002, ONCOR, the utility company, had been cited 125 times for cutting streets without a permit, 144 times for not installing a permanent repair and 38 times for other stuff.

Dallas Water Utilities--a city department--had been cited 255 times in six months for breaking the law on street cuts. Southwestern Bell had 90 violations. Other people had a combined total of 37 violations. So the auditors asked the street cut team how much it had levied in fines.

Who, us? Levy fines? Umm, golly-Bill. They hadn't done that part. No fines. Not fine-one, not dime-one. No fines had been levied for street cut violations in the first six months of 2002.

SH&W NOTE: Purpose of law enforcement not same as bird-watching. Your mission is not merely to observe violations of the law. Counting up violations, keeping lists, very admirable, light-years ahead of Fair Park. But for our money--was it another measly old half-million, roughly?--we would like to see something done to actually fix the situation with the bomb craters.

ITEM: We mentioned craters? Do you know how the city fixes potholes? Forget about what it costs. Let's just talk about the method. Say you have one in front of your house that NASA could do training missions in. You call 311. That's the Citizen Response Management System (CRMS). CRMS interviews you, writes a report, sends the report to an SRA (service request agent).

The SRA goes to the site of the alleged pothole and does an assessment. If he agrees that the pothole is a pothole, he makes a report to an SRG (street repair group). The SRG refers the report to an AS (asphalt supervisor). The AS goes to the site and does an assessment.

Why? Wasn't that already done? Well, come on now, think about it. Can an AS afford to simply go on the word of an SRG who got all of his information from a CRMS? Now, aren't you ashamed of yourself?

If the AS agrees...OK, wait a minute. Did you just now accuse me of making this stuff up? Oh, man, that steams me. Let me tell you something. You can read all of this on the Web and weep. This is from the September 12, 2003, Performance Audit of Street Pothole Repairs and Related Issues, Report #395, which you can find on the city auditor's Web page at

Now where was I before I was so rudely interrupted? If the AS determines that the pothole is indeed a pothole as reported by the ARG based on the information contained in the report from the CRMS, he dispatches a PPT (pothole patch truck) to come out and put some asphalt in it. When the PPT has completed the repair, it notifies the SRG, which makes a report to an AS, who goes to the site of the alleged repair and makes an assessment.

SUGGESTION FROM SH&W, JUST TRYING TO HELP, DON'T GET TOUCHY: What if the lady at 311 just called over to the pothole guys with the address? The pothole guys could put the address on the list taped to their windshield. If they found there was no pothole when they arrived, they could not do a pothole repair. Just thinking out loud here.

I have a raft of items I couldn't even get to in this space. The larger point is this: The system of government we have in Dallas is stupid. I hear people getting on Mayor Laura Miller's case for sticking her nose in the city manager's business. But if you were down there every day, you would want to stick your foot in his business.

And the worst part? The worst part is that the pervasive culture of unaccountability in city government in Dallas is not the city manager's fault, either. It is the fault of a system that has no bottom line. Nobody's in charge. Nothing is anybody's fault.

The question we should ask ourselves every day in this city is how to fix the underlying system. The question we need to answer isn't about potholes. It's about what kind of system assigns half a dozen people to fix one pothole, including at least three who never touch a shovel.

I personally challenge The Dallas Morning News, by the way, to hire its own accounting firm to do an efficiency study of City Hall, the way I already have. And I hope you don't think it's just because I heard a rumor they were already doing that. Do you honestly think I'd pull a cheap trick just to scoop the News on its big story?

Don't answer that question.

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Jim Schutze has been the city columnist for the Dallas Observer since 1998. He has been a recipient of the Association of Alternative Newsweeklies’ national award for best commentary and Lincoln University’s national Unity Award for writing on civil rights and racial issues. In 2011 he was admitted to the Texas Institute of Letters.
Contact: Jim Schutze