What Kanter Didn’t Tell You Changes Everything

What Kanter Didn’t Tell You Changes Everything
By: Susan M. Halpern
(Addison councilmember 1992 – 99)

Last week, accountant Larry Kanter made a presentation to the council. You may recall that Kanter was hired two years ago to do what was then called a “transitional audit,” the terms of which remain somewhat indefinite.

To be clear, Kanter confirmed that he has found no wrongdoing.  No money is missing, nothing’s been taken.  Nonetheless, Kanter repeatedly engaged in inflammatory, unsubstantiated speculation regarding things that could have happened.  Kanter disparaged prior management and was effusive in extolling the virtues of current management.  For its part, council played along, acting shocked and joining in the unsubstantiated speculation of what could have happened in the past.

The purpose of this exercise became clearer on Friday, when Kanter’s theme was carried into our Town’s newsletter.  Meier adopted his clever “past/present” catchphrases, suggesting that he and his cadre had arrived just in time to save Addison from what he assures everyone was just a terrible past.

But here’s the thing: the past was GREAT.  Addison was the gold standard before Meier arrived, with a strong reputation as a unique and innovative community.  Don’t believe me, just walk around and look at our Health Club, our many parks, our vast hiking trails, the Vitruvian development, Addison Circle, our theater, our conference center and the extraordinary park/special events space directly across the street.  Consider the many special events held on that space, look at the vibrant restaurant and retail presence, tour our airport and the Cavanaugh Flight Museum.  Honestly, the list goes on and on.  How can Meier credibly attack the past in the face of what you see around you every day in Addison?

The fact is that Addison’s past consisted of a very successful council/management collaboration that resulted in responsible budgeting, actual transparency, superior services, stable, talented and innovative staff, and councils that believed in true service to the community.  Our taxes were almost 30% lower just five years ago, and our councils didn’t politicize the tax rate.  Nor did any past council ever set our tax rate above the rollback rate, as this council has, for the first time in Addison’s history.

So why the revisionist history?  And why now?

The timing of Kanter’s presentation and his one-sided attacks on prior management can only be characterized as political, because here’s what you weren’t told:

Kanter’s complaints about an alleged lack of cooperation by management were made them more than a year ago.  And, Kanter’s claims were refuted by management – in writing – also more than a year ago.

That’s right, Kanter’s non-cooperation allegations are old news.  And, management had plenty to say about all of it.  And yet you heard nothing about any of that last week, either from Kanter or from Meier.  So, why are they bringing it up now, more than a year after it played out, without mentioning management’s perspective?  On the eve of the election season?  Well, the questions answer themselves, don’t they?  How do you feel about this council politicizing Addison’s finances?

It’s also important to know that we’ve tried to get the documents in which we believe management’s views about Kanter are expressed.  In fact, request has been made to review Kanter’s work papers, including documents relating to this “non-cooperation” dispute with management.  But Addison’s current regime has actively concealed the overwhelming majority of these documents from the public.  That concealment has prevented the truth from being heard, and it also paved the way for Kanter to say whatever he wanted to in his presentation.  And of course he did, with Meier and others sitting gleefully silent while Kanter did their dirty work by trashing former management.

You have to ask: if the facts are as they claim, why are they hiding unquestionably relevant documents?  If prior management’s conduct is truly indefensible, why not allow their input and perspective to be heard?  Indeed, how could last week’s presentation ever be seen as a sincere quest for the truth, when it was orchestrated to exclude significant and important facts absolutely necessary to get the whole picture?

Here’s another important question: Where were Addison’s auditors during this discussion or, for that matter, where was any reference to their work?  The fact is that Addison has received clean audits for years.  Addison’s financial reporting has also received Comprehensive Financial Report awards from the Government Finance Officers Association (“GFOA”) for 37 years, and the Budget Award for 26 years.  These awards involve critical review and examination from the GFOA, and they are important to Addison’s reputation.  Addison’s staff has worked hard to build and maintain that reputation, only to see it publicly attacked by its own council.

So are we now elevating Kanter to some sort of supreme status that trumps Addison’s real auditors?  This man who made a point of trashing Addison’s former management as if on cue?

Let’s look at it from another angle.  Putting aside the question of how far afield we now are from anything that could be characterized as a “transitional audit,” should any accounting professional who is hired to evaluate anything in Addison, stand up and publicly attack or compliment management?  Shouldn’t every accounting professional be focused on issues, not people?  And, to be truly objective, don’t they have to acknowledge the position of management, particularly if it refutes claims being made by the accounting professional?

Here is what the American Institute of CPA’s (“AICPA”) Code of Professional Conduct says about these issues:

“Integrity requires a member to be, among other things, honest and candid within the constraints of client confidentiality. Service and the public trust should not be subordinated to personal gain and advantage. Integrity can accommodate the inadvertent error and honest difference of opinion; it cannot accommodate deceit or subordination of principle.”

“Integrity is measured in terms of what is right and just. In the absence of specific rules, standards, or guidance or in the face of conflicting opinions, a member should test decisions and deeds by asking: ‘Am I doing what a person of integrity would do? Have I retained my integrity?’”

“Integrity also requires a member to observe the principles of objectivity and independence and of due care.”

“The principle of objectivity imposes the obligation to be impartial, intellectually honest, and free of conflicts of interest.”

“Regardless of service or capacity, members should protect the integrity of their work, maintain objectivity, and avoid any subordination of their judgment.”

No matter who you may like or dislike, you have to be concerned about any accounting professional who publicly disparages or praises management as Kanter did.  How can any such individual claim to be impartial or objective?  But it goes deeper: when Kanter failed to even mention that prior management refuted the very allegations he was making, can anyone credibly argue that Kanter was being intellectually honest?  We submit that Addison’s residents deserve – and should demand – more from those being paid with our tax dollars, including compliance with the referenced AICPA principles.

And, exactly what is a “transitional audit”?  It never seems to be defined or explained, other than it never seems to end.  Indeed, Kanter’s work appears to have morphed into some type of examination of Addison’s processes, hardly the work of an “audit.”  Certainly, if the council wanted to examine Addison’s processes, it could have set such an examination as a priority by putting it in the budget and undertaking the work in a systematic, organized way.  That would have included taking bids for the work and finding a competitive and fixed price that makes sense.  But that didn’t happen and so, two years later, Kanter is still here and taxpayers are still paying for it.

Recognize the plight of the staff in all this.  This council has consistently refused to deal with Addison’s longstanding compensation issues.  Among other things, that has left Addison understaffed, including in the Finance Department, which was never fully staffed during former CFO Eric Cannon’s tenure.  Even Kanter acknowledged the lack of staffing and the impact that has on the work of the Town.  Those are predictable consequences of policy choices made by this council.  Consider as well that since Meier has been mayor, this council has met more than ever before, for longer than before, and that’s before you begin to consider the countless committee and other staff meetings.  The staff is continually pressed beyond reasonable limits.

This also seems basic: If this council really wanted to make a sincere effort to make things work better and button-up processes, then the council could, should and would facilitate an organized process that is constructive, not vindictive.  But that isn’t what’s happening.  Kanter’s presentation was in large part a character assassination of everyone and everything that came before, a theme gleefully amplified in Meier’s parades-as-a-newsletter missive.  The focus was far more on people, and far less on issues.  If you were an Addison employee, would you trust such a process or the people who orchestrated the debacle that passed for a meeting last week?

Remember as well that the council is prohibited by Charter from directing the activities of staff.  They can only deal with the City Manager.  In a very real sense, the arrangement with Kanter now circumvents that prohibition.  From what we hear, Kanter regularly interrupted staff by demanding information and explanations, and when he was provided with information, he often didn’t understand it, given his limited experience with municipalities.  On the latter point, if you watch the video, Kanter was asked about his experience with municipal courts, and he ducked the question, vaguely answering that he had “been involved in other court systems.”  You have to wonder how any of it was ever meant to be a constructive effort to improve Addison in any way.

And here’s the thing about the “past/present” comparison: it’s not Addison’s past that is a mess.  The mess is staring us straight in the face.  Don’t believe me, just consider the numbers.  In the five years Meier has been mayor, taxes are up a staggering 28.8%.  Meier and his cadre have overspent the budget in both of the last 2 years, by a total of almost $2 million.

Meier also orchestrated a one-cent tax rate decrease in last year’s budget, but failed to mention that it was actually funded from Addison’s reserves.  Many of us expressed concern at that time about the mismanagement of the tax rate, and its use as a campaign issue.  We were right on both counts: Meier touted the tax rate decrease in his no-opponent campaign (never mentioning the increases in taxes) and, as if on cue, this year’s tax rate was set above the rollback rate the first time in Addison’s history.

And of course, we all witnessed the debacle of the Sam’s redevelopment, when Meier and 4 others ignored the clear will of the majority of the community, insulted that majority by calling it “misinformed,” conducted no financial analysis of the project, and then voted to donate $6.5 million dollars of taxpayer money without any clue where it’s coming from.

All that’s before you get to the decimation of our staff, including the mass exodus of senior key employees, many of whom have cited the toxic, accusatory, hostile atmosphere Meier has created.  Last week Meier touted his new “tone at the top” theme.  But if he really wants to get to the bottom of problems with a poor “tone at the top,” Meier probably ought to look right in the mirror.  Meier’s heavy-handed, dictatorial approach is not designed to help Addison succeed.

So, before you rush to adopt the disparagement of prior staff and management, do some critical thinking and ask yourself why Kanter, Meier and perhaps others on the council have so willingly omitted the critical perspective of prior staff and management.  Why are they hiding the facts and actively concealing documents that are obviously necessary in order to understand the truth about Kanter’s work and his allegations of non-cooperation?  And why would any self-respecting accounting professional make such inflammatory and unsubstantiated insinuations about prior staff and management?  Kanter unquestionably injected himself into the political landscape, lending his credentials to Meier’s latest clever theme, and we urge that that was a significant error that has to taint his participation in any review of Addison’s processes, if that is what this has now become.

And again, why now?  If the dispute between Kanter and prior management over alleged “non-cooperation” is well over a year old, WHY NOW?

One last thing: this author has now submitted a very specific demand for the documents relating to Kanter’s claims of a lack of cooperation.  Now that Addison’s council has publicly joined issue on this point, including by disparaging prior management and purporting to quote what they said, Addison can’t possibly claim that the public isn’t entitled to know all the facts.  And, this author has also requested Kanter’s timesheets.  Among other things, this will tell us whether Kanter has been communicating directly with members of council.  Stay tuned, this could get very interesting.

Wherever you may fall in this now-divided Addison, we would all have to agree on this: Kanter’s presentation and Meier’s ready adoption of it have tarnished Addison’s reputation, and that is disgraceful, unjustified, irresponsible and inexcusable.  Addison’s residents deserve far better from their elected representatives.