Illegal Clandestine Restructuring Attempt in the City of Grand Rapids

Update: The City Comptroller issued a statement warning the public about this proposed change. It’s worth a read.

"Bad men need nothing more to compass their ends than that good men should look on and do nothing." -John Stuart Mill

Cliff Notes

The Grand Rapids City Commission’s agenda for Tuesday, December 17th includes a proposal to amend the current year’s budget, effectively stripping the City of financial oversight guaranteed by our City Charter. It conspires to gut the City Comptroller’s Department by reassigning 13 of the 16 staff members to the City Manager’s purview, leaving only three under the City Comptroller! 😲 Their ostensible reason is to “minimize risk and maintain compliance with the Charter” per the Agenda Action Request put forward by Molly Clarin, CFO. Contrary to their claim, this move contradicts the plain language of our City Charter. Even worse, it seeks to invalidate the will of the 44,188 Grand Rapidians who re-elected Max Frantz as City Comptroller in 2022.

Furthermore, voters have already decided: a 2012 ballot initiative to change the City Comptroller from an elected position to one appointed by the City Manager was defeated 46,030 to 26,246. This proposal seeks to achieve the same outcome a majority of Grand Rapidians have already said they don’t want; it is antithetical to our democracy and an audacious attempt to subvert the will of the People.

Even more brazen is Mr. Washington’s team presumptively sending out an email to City employees on Friday, the 13th, informing them of these changes before it was even presented to the Fiscal Committee and City Commission, much less approved.

Full Disclosure: Max and I became friends during our time at Grand Valley State University. Over the years, I’ve come to know him as an intelligent, talented, thoughtful, just, ethical, and kind individual. His role as City Comptroller is driven by a genuine desire to make Grand Rapids a better place. While our conversations have inspired me, it was solely my decision to write this blog post, and it was not made at his request.

You can find the agenda here. The Agenda Action Request is under “Ordinances to be Adopted” Item 2, Attachment M.

Let Your Voice Be Heard!
Here’s a Google Doc template you can tweak to submit your concerns.

Note: There are 3 elected City Commissioners on the Fiscal Committee: Milinda Ysasi, Kelsi Perdue, and Jon O’Connor (chair). If 2 or more vote to table or deny this request, it will not proceed to the City Commission, so those Commissioners should be your primary focus if you’re willing to reach out. Otherwise, the entire Commission will vote at their 2 pm meeting that same day, so all Commissioners should be contacted. If Ysasi (Ward 2), Perdue (Ward 3), or O’Connor (Ward 1) is your Commissioner, please ask them to deny this request or at least to table it for further discussion and public input.

My friend Adam detailed how to contact the City Commission and provided your Commissioners’ email addresses. You can email them directly, but to have it documented in the public record and shared with the entire Commission in their packet, you’ll need to email it to cityclerk@grcity.us with a subject line like “Letter of Opposition for the 12/17 City Commission Meeting”.

Details

Take 3 minutes and read through Part 1 Title VI of our City Charter. A reasonable person will quickly realize that Point 87 outlines the responsibilities of the City Manager as managing:

1. The Department of Public Service
2. The Department of Public Welfare
3. The Purchasing Department
4. The Taxation Department (amended February 21, 1949)

The accounting function is conspicuously and intentionally absent.

Point 90 assigns the City Comptroller 12 specific responsibilities:

1. Issues and signs all checks
2. Keeps the Account of Moneys Due from any and every source
3. Keeps the Account of Moneys Received
4. Keeps the account of funds and disbursements
5. Prescribes the Uniform System for tracking the money
6. Audits any and all accounts and reports findings to the City Commission
7. Balances the books
8. Has access to all books, records, and documents kept by any officer, employee, or department of the City
9. Audits and reports to the City Commission any claims against the city
10. Presents detailed financial statements to the City annually or whenever required
11. Provides all of the following for the Board of Education as well
12. Performs other duties as required by the City Commission

The Agenda Action Request states the “Impact” on page 2: the CFO, and by extension, the City Manager, are trying to seize control of the accounts payable, payroll, and financial systems functions—all duties our Comptroller is obligated by our Charter to perform. They claim that: “The primary functions of the Comptroller are to sign all checks on authorized amounts, account for money received and disbursed, prepare a detailed account of the funds of the City, and review the City’s records and report any discrepancy to the City Commission.” This is only a partial truth: If I reference the 12 responsibilities listed above and in the Charter, it actually reads like this:

“The primary functions of the Comptroller are to sign all checks on authorized amounts (A), account for money received (B) and disbursed (C), prepare a detailed account of the funds of the City (D), and review the City’s records and report any discrepancy to the City Commission. (I)”

Kudos to their political craftsmanship, but they’re a few letters short of a winning Scrabble hand. What about responsibilities E, F, G, H, J, K, and L?

If I evaluate their claim assuming the best intentions, their strongest rationale for this move is probably that responsibility “E” says “prescribes” vs. “operates”. If a “uniform system” is Greek to you, it’s just the City’s accounting software, their Enterprise Reporting System (ERP). Small businesses might use something like QuickBooks. Large companies usually use something like SAP or Oracle. The City is in the process of switching to Oracle right now, which the Comptroller’s Office is managing via outside consultants. I interpret the “prescribe” to mean he can hire consultants and/or staff to operate the system since operating an ERP system for an organization as large as the City isn’t feasible for one part-time person.

If I were the City Manager, I could understand wanting the accounting function underneath me instead of having a third-party watchdog looking over my shoulder to ensure I’m doing things properly. However, Mr. Washington’s duties, as prescribed by the charter, include proposing a $690 million budget and managing his designated responsibilities—none of which encompass the tasks he seeks to usurp from the Comptroller and place under his control. The question isn’t whether questionable activities, like misclassifying dubious charges as city expenses or using taxpayer money to subsidize privately owned cars, are occurring. The real question is how long it will take for these transgressions to be discovered and rectified. While the City Manager might prefer to keep those instances under wraps, as a taxpayer, I strongly believe they should be made public. The majority of Grand Rapidians seem to agree and favor a system of transparent local accounting over an opaque one. Supreme Court Justice Louis Brandis coined the aphorism “Sunlight is the best disinfectant.” ☀️

Separation of Duties

Large institutions accounting for public money require separation of duties and internal controls to minimize the opportunities for fraud or abuse.

When I worked for Steelcase, there was a rule that whenever company money was spent on a group for something like a meal, the person with the highest rank paid. The reason was simple: managers approved their subordinates’ procurement card expenses. If my manager took me to the mall and instructed me to buy him a diamond necklace so he could give it to his wife as a present, he could approve that expense. I would be in a difficult situation because he’s my boss and could fire me if I refused. Internal controls like this keep people honest.

The separation of duties in our government prevents any single official or department from accumulating excessive power, which serves the public’s interest and ensures independent oversight of city funds. Our City Charter wisely allows residents to elect a trusted Comptroller to manage and perform accounting and payments for all City departments, thus avoiding the risks associated with a lack of checks and balances, as seen in Washington’s proposal. Our Comptroller and his team are intentionally structured to alert the public, external auditors, or other agencies when issues arise.

Historical Context

This problem likely originated after our City added the Chief Financial Officer role shortly before Mark Washington began his tenure. It’s important to note that The Home Rule City Act 117.4s does not require a City to have a CFO until it reaches a population of 600,000. Because GR has around 200,000, this position is optional, with no legal power and little practical influence. In a typical company, the Treasurer and Controller report to the CFO, but governments must follow their legal ordinances. There seems to be significant ambiguity regarding the CFO’s responsibilities and limitations, particularly since our City Charter assigns most accounting functions to the Comptroller and Treasurer. The charter mandates that the Treasurer reports to the Commission and the Comptroller reports directly to the People, meaning neither can report to the CFO. In practice, the CFO’s office primarily functions as a budgeting office under the City Manager’s authority, which is reasonable but comes with a title that is obviously causing confusion. If the City Manager desires full control over all accounting functions, he must follow Michigan law and request an Charter amendment similiar to the unpopular one that already failed by a wide margin. Instead, the administration has been slowly siphoning away legally prescribed duties from other functions and appropriating them, which is illegal.

The City Charter is unequivocal: those functions belong under the City Comptroller. They’ve been since the City Charter was first ratified. It seems awfully convenient that this request appeared immediately after the City Comptroller identified that executing his duties was being impaired because someone did a similar reassignment of staff a few years earlier. Two Financial Systems Administrators were removed from the City Comptroller’s office and placed under the purview of the CFO. The Comptroller attempted to resolve this behind closed doors, but when he was stonewalled, he brought it to the City’s Civil Service Board Meeting on November 19, 2024. Minutes were either not kept or not posted, so I’ll summarize the issue he presented as best as I recall: an unknown individual tweaked the job description for two Financial System Administrator positions. Here’s the original. Notice the underlined last sentence under the General Summary: “The work is performed under the managerial direction of the City Comptroller/Deputy Comptroller.” Here’s the unauthorized, edited version with that sentence suspiciously removed. Somehow those positions and the budget for them were quietly migrated to the CFO/City Manager. This reassignment should have followed a similar process to what they’re attempting to do now, but nobody has been able to produce any documentation showing that the City Commission signed off. Plus, that transfer would require the Grand Rapids Association of Public Administrators (APAGR - the Union) be notified and be allowed to comment. An APAGR Rep testified during the public comment period on the 19th that they have no record of being served notice for the organizational changes of those two positions. As I mentioned in my public comments at that meeting, this presents potential legal liability for the City as the APAGR has grounds to sue the City for not honoring its contract.

The interim Deputy Comptroller also spoke and explained why those Financial Systems Administrators should be returned to their rightful department: Accounting System Admins are required to pull reports needed for audits. Getting their time currently requires approval from their managers within the City Manager’s Org Chart. If the Comptroller wants to audit that group, he now needs permission from that group to perform the audit. If there was something to hide, how difficult do you think they might make this task? Or even for a less nefarious reason, they may simply have competing priorities. Both impair the ability of the Comptroller to perform the duties which he was elected to perform.

After the public meeting was adjourned, Molly Clarin, the CFO, was observed approaching three of the five Civil Service Board Members and speaking with them off the record. This is a flagrant violation of the Open Meetings Act, and that conversation should be publicly disclosed. The APAGR sent a letter acknowledging the incident and demanding transparency, but this request remains unaddressed. This situation is particularly frustrating because the Board permitted a private sidebar meeting with the unelected CFO, excluding a potentially meaningful conversation from the public, while limiting our elected Comptroller to just three minutes to present his case. Can you imagine a courtroom where the prosecutor is given only 3 minutes to present their case, while the defense attorney is allowed 3 hours? And then the prosecutor is barred from even hearing what the defense attorney said?

Instead of doing the right thing and fixing the error by restoring those positions to the Comptroller’s Office, the CFO and City Manager appear to be doubling down and attempting to take the nuclear option.

Call to Action

The City Comptroller, an elected position, serves as the chief watchdog for the People, whereas the City Manager is an appointed position. Thus, the highest paid, most powerful bureaucrat in the City is attempting to quietly defang the very role that provides oversight of his actions. This is both WRONG and detrimental to the integrity of our City!

If the City Manager usurps control of the accounting functions, he will further erode trust in our municipal government. This power grab is not only a violation of the City Charter but also a threat to our city’s financial oversight. The brazen audacity of this attempt is as shameful as it is despicable.

Here’s what should happen:

1. This Agenda Action Request should be denied with prejudice, ideally at the 8:30 am Fiscal Committee Meeting, otherwise at the 2 pm City Commission.
2. The City Manager’s team should retract the email sent to City Employees, clarifying that he did not have the authorization to make those changes and apologizing for the confusion.
3. The two original Financial System Administrators and budget should be returned to their proper organizational structure underneath the purview of the elected City Comptroller and their accounting function.
4. The City Commission should admonish the City Manager for his actions and inform him that oversight provides an important check that the public expects, deserves, and demands.
5. The City Commission should allocate a budget for two additional Internal Audit positions under the Comptroller and mandate they conduct a thorough investigation to uncover any potential malfeasance. (Note: Cities our size typically have a bare minimum of two to three internal auditors, often many more. Currently, the City of Grand Rapids has only 1 Internal Auditor position, which has been vacant for months. Filling this should be a top priority for the city.)
6. The City Commission and/or City Manager should re-evaluate the wisdom of having a CFO or the title of CFO in the first place. While some cities have their Comptrollers report directly to the CFO, that’s typically not the case when the Comptroller is elected and the CFO is appointed. And even in those cases, the Comptroller is still responsible for the accounting functions. It appears that either our CFO or City Manager lacks clarity as to what the role of the CFO is and either isn’t aware or doesn’t care about the functions that are enshrined in our City Charter whereby many of those responsibilities are, by law, delegated to our City Comptroller and City Treasurer. So if the role remains, the ambiguity should be removed by clarifying what exactly that role does.

I realize each point gets more extreme and not everyone will agree with all of them. However, the most critical priority is clear: Deny this request! Our Charter mandates it, and the People deserve it.

Here’s the Google Doc Template you can use as a template to tweak and submit your concerns. It’s solely about denying this request and stops short of requesting all five points above. You can add anything you’d like or remove anything with which you do not agree. This is democracy in action!

Changing our Charter

(For Nerds!)

We could engage in a civic debate about the optimal reporting structure. But because the proper process of changing our City Charter has not been followed, the current Charter must be adhered to, as mandated by Michigan State Law. The City Manager is welcome to attempt to amend the Charter, but he cannot ignore or act in direct contravention of it. Strong-arming subordinates into stating that non-compliance is compliance, does not count. Sorry, Mr. Washington.

Michigan City Charters are governed by The Home Rule City Act of 1909.

Section 117.21 provides the process for amending a Michigan City Charter: a Proposal is first made by either:

1. The City Commission: It requires a 3/5 vote of the members. GR has 7 Commissioners (2 for each of the 3 Wards and the Mayor), so to achieve the 60% requirement, 5 of the 7 must vote for the proposal.
2. By Petition: 5% of the city’s qualified electors must sign a petition.

The full amendment must then be published, so the public can vote on it during the next election. However, second proposal to remove the accountability and oversight of the most powerful person in the City would likely fail just like the first one did.

If governments want to be trusted, they must act in a trustworthy manner. Actions like this erode confidence and make people doubt that those in power are acting in their best interests. This situation reeks of subversion and cover-up. While it may ultimately be nothing, being told there’s “nothing to see here, trust us” only heightens my curiosity rather than quelling it.

Note: The Fiscal Committee will review this before the City Commission. It appears on their agenda as Item 6, Attachment M.