continued A dysfunctional accounting system is often constructed to cover up fraud, says Pat Shea, former mayoral candidate. "It usually starts by trying to cover up or misrepresent one event or thing that the people thought could be corrected over time. If it can't be corrected, you have to go to a higher level of architecture to continue the misrepresentation. It becomes more and more complex over time, as the perpetrators continue to make the architecture live with the original misrepresentation and subsequent misrepresentations."
It's the old tangled web analogy: one whopper leads to another and to another. "The City of San Diego financial statements are almost unusable," says Shea. "You can't find a line item for payroll, and payroll is important. That is how you compute the pension-system contribution."
Shea's wife, Diann Shipione, the whistleblower on the crisis, points out that this month, the city manager proposed a so-called solution to the pension mess, including sale of pension obligation bonds. The pension liability would be amortized over 15 years. The payments in the latter years "could be astonishingly high," she says. So the city manager's office showed an amortization schedule for only 5 of the 15 years. Councilmember Donna Frye asked for more information and was stonewalled. "It is most unusual," says Shipione, "for city staff and their hired actuary to propose a 15-year fixed amortization schedule and to not run the projections for the full 15 years but rather only for 5. Does this make any sense? Of course not."
But maybe it's not intended to make any sense.