Mayor reacts to auditor’s statements regarding furlough audit

Mayor Bernard P. Carvalho, Jr. had the following reaction to a press release issued by County Auditor Ernesto G. Pasion regarding a recently completed audit of the county furlough program that was utilized in 2010:

“When presented with the draft audit of the furlough program prepared by PKF Pacific Hawai‘i’ LLP, we felt it was well-presented and included findings with which we largely agreed.  The final audit closely mirrors the draft that we reviewed and commented on in April of this year. Sadly, the auditor’s press release politicizes and distorts a perfectly clear and useful report. 

“There are issues raised in the press release that were not included in the draft report, and therefore we had no opportunity to comment on them prior to the audit being finalized.  Furthermore, the auditor’s release contains inaccurate statements and inflammatory comments that are not consistent with the audit findings. 

“Specifically, the auditor states that there was a $58,614,000 ‘unappropriated surplus’ at the time the furlough was implemented.  This is incorrect.  The county’s certified annual financial report (CAFR) for fiscal year 2009, which is commissioned by the auditor himself, shows that there was a $32.8 million unassigned fund balance, and that all other funds of the county were either committed, assigned or restricted. 

 “Pasion also asserts that the unions were likely not aware of the county’s financial condition when they agreed to the furlough.  The county’s financial condition is documented in the CAFR and the document was and is readily available for review on the county’s website.  Furthermore, we were in consultation with the unions prior to the implementation of the furloughs, and no financial information was withheld from the unions during those discussions. 

“Most troubling are the auditor’s accusations of ‘favoritism’ in the implementation of the furlough program.  This was not listed as a finding in the draft audit and thus we were not allowed an opportunity to respond prior to the audit being finalized.  Several examples are listed in the release that are not accurate:

1.    The deputy county attorney salaries were not raised to the maximum salary level and to this day remain below the maximum salary level.  None of the deputy county attorneys were or are being paid above the level allowed by the salary commission.

2.    Water safety officers, lifeguards, police dispatchers and public safety officers were treated differently than other employees by all jurisdictions because of the nature of their jobs.  Furloughing these workers for two days a month would have compromised health and safety to an unacceptable degree, so an alternate plan was devised for them and agreed to by their respective unions.

3.    While there were some withholding errors during the furlough period, they were identified by our finance accounting staff and to our knowledge all have been rectified.  We will be following up to verify this.

“The purpose of the audit was twofold and is clearly stated in the final report.  First, was to assess the financial impact of the furlough program, and the second was to determine if the county planned and managed the furlough program effectively and efficiently.    

“The audit acknowledges that savings from the furlough program actually exceeded what we were projecting to save at the outset of the program.  It also acknowledges that the furlough program ‘was effective but it could have been more efficient if the County had followed best practices.’ 

“Raising new issues in the press release that were not dealt with in the audit after the fact is puzzling and disturbing, and distracts from an otherwise useful audit.”