I was elected to the City Council in 2004 to reign in government spending. One of our first reviews of city finances examined the city's health insurance program.
In reviewing the city's expenses we discovered that the city had been paying upwards of $1 million a year in health insurance premiums for dead people. That's not a typo, we were paying $1 million a year for dead people's to have health insurance! You don't need a Harvard degree to know that dead people do not need health insurance. Yet for one reason or another this past week City Manager Jack Schnirman rehired one former employee and the very firm whose watch this $1 million oversight occurred on.
After the story broke local taxpayers were outraged that the city could be that wasteful with their hard earned money. The local media got the story and it was reported on TV, radio, and in local newspapers. Newsday reported "Dead, but still getting benefits"
How could this happen? As City Council President I first turned to Alice Schildkraut, who was the city's comptroller. She could not provide an adequate answer. Soon after she left the employment of the city. Then I asked the city's independent auditors, Albrecht, Viggiano, Zureck & Company, how it could have happened and how no one picked up on the $ 1 million mistake. Like Schildkraut, they could not provide an adequate explanation and it was soon thereafter we hired a new independent auditor, Bloom & Co. Oddly enough Schildkraut, the former comptroller, found a job with Albrecht, Viggiano, Zureck & Company where she currently serves as their Government Services Specialist.
Last week the Mandel, Adelson, and Torres administration ignored those 2004 "oversights" when they rehired the same firm, Albrecht, Viggiano, Zureck & Company, to help the city out of its current fiscal condition. On the city council agenda the administration proudly announced, "The City received seven responses to its Request for Proposal (RFP). After the RFP was scored, the City interviewed three finalists. This firm was deemed the best to meet the City’s needs and has previously worked successfully with the City." Did Schnirman and Mandel and Company truly believe that a $1 million oversight of 22 dead people getting taxpayer funded health insurance is a "success?"
Given the fact that the company didn't catch $1 million in waste in 2004, why was the firm rehired? One of two things happened: Either Schnirman and Mandel and company didn't do their homework or they didn't care about the 2004 $1 million oversight. Both are unacceptable, especially given the current state of the city's finances.
Albrecht, Viggiano, Zureck & Company is no stranger to scandals related to health insurance, as a simple Google search reveals. In fact, the New York Times reported, also in 2004, that county officials "suddenly yanked a contract from one of three accounting firms hired to do the work after discovering that its associate had been convicted in the same scandal that prompted the restitution. 'This is like hiring Martha Stewart to give stock ethics lessons,' said Peter J. Schmitt, who revealed the situation. ''I'm outraged that Suozzi would hire the very firm whose partner was convicted of a felony'' to perform oversight, he said. The scandal involved bribery under the prior administration to switch the health insurance for county workers to the Benefit Plan Administrators company. The change was supposed to save millions of dollars, but instead cost taxpayers an additional $70 million."
Based on the firms prior record inside and outside of Long Beach who thought that "this firm was deemed the best to meet the City’s needs and has previously worked successfully with the City? " Was the firm rehired because they were deemed "the best to meet the city's needs" or were they rehired because soem of the same people who had power and political influence in city hall in 2003 when I was elected are many of the same people who have returned to power and influence in city hall, like Democratic Leaders Mike Zapson and Steve Kohut? Who "deemed" that Albrecht, Viggiano, Zureck & Company was "the best to meet the City's needs"?
City Manager Jack Schnirman needs to publicly answer these questions. He owes the taxpayers an explanation into this matter and needs to explain who recommended this firm to the city at this time; who missed this? Who made this decision?
All we have heard from Schnirman, Mandel and Company is how the city's finances have been grossly mismanaged for the past few years. I have been arguing the city is not in as bad of a condition as Schnirman wants us to believe. To that end consider this; how bad can the city's finances be if Schnirman, Mandel and company thought a firm with this kind of track record would help? In addition, if the city is in such a "fiscal crisis" how could they have handed out raises and jobs to multiple people totaling nearly $250,000 in the last 3 weeks, including the hiring of LB Democrat Leader Steve Kohut's son Matthew to a $45,000/year recreation job?
Didn't Schnirman say there was a hiring freeze and a fiscal crisis? Something just doesn't add up and the taxpayers deserve answers.
