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Karen Bradley, City's solvency czar and assistant controller, abruptly sacked

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This story has been updated below.

Chaos reigns in the Finance Department at Fresno City Hall.

Assistant Controller Karen Bradley on Friday was fired by Controller Mike Lima, according to a source close to Bradley.

Long-time city employees were abuzz Monday afternoon about the firing. But no one felt safe to publicly comment.

Council Member Lee Brand said he’s trying to find out what happened.

My efforts to contact Bradley were unsuccessful.

Communications Director Mark Standriff told me City Manager Bruce Rudd most likely would have no public comment.

“It’s a personnel matter,” Standriff said.

The firing of a file clerk is a personnel matter. The firing of Karen Bradley is a policy matter.

The administration of Mayor Ashley Swearengin for years loved to sing the praises of Bradley to reporters. By those accounts, Bradley played a pivotal role is keeping the city solvent during the Great Recession.

Maybe Bradley’s past successes helped lead to what apparently was a falling out with Lima.

Bradley was Fresno’s interim controller in 2008-2009, when the mayor’s office transitioned from Alan Autry to Swearengin. Joe Gray was named controller early in Swearengin’s first term. Bradley returned to her job as assistant controller.

The effects of the Great Recession were beginning to hit City Hall. The controller’s job – keep the city out of bankruptcy court, keep the city on the good side of Wall Street credit-rating agencies – was of unusual importance during this time.

Gray never made an impression on policy-making, and left for another job after about two years.

Bradley once again took control of the Finance Department, although she insisted on retaining the title “assistant controller.” She told me often that she had no interest in the top spot on a permanent basis.

Bradley didn’t appear often in front of the City Council, but the legislators paid close attention when she did. Bradley could be counted on to make sense (in layman’s terms) of the Comprehensive Annual Financial Report. That’s no small feat.

There was the memorable Thursday in late April 2013 when Bradley went before the council to announce that the latest Comprehensive Annual Financial Report would contain what bean-counters call the dreaded “going-concern” paragraph.

The paragraph indicated that accounting experts were big-time worried about City Hall’s ability to remain a solvent municipal corporation – an ongoing entity, or “concern” – without continued changes in funding/spending.

The “paragraph,” written by Bradley and her team, was actually 14 paragraphs. I give you the first two:

“The City continues to weather severe financial distress. Despite extensive and painful cuts in staffing and service delivery, financial projections continue to reflect a difficult road ahead, unless certain critical assumptions used to build those projections come to fruition.

“As of June 30, 2012, the City has depleted nearly all of its emergency reserve, to the extent that it is dangerously low and plainly imprudent. This, in addition to long-standing negative fund balances, along with the overall poor financial health of the City, and the factors discussed below, have resulted in the significant downgrades in the City’s bond ratings by all major rating agencies. Reports from the City’s administration as well as reports from the bond rating agencies concur that restoring the City’s financial health will depend on the City’s ability to pay back negative fund balances, restore a long-term operating balance in the General Fund, and rebuild the emergency reserve in the General Fund, as well as reserves in other Funds. The City’s emergency reserve remains at $1.48 million with no prospect of near term increases.”

The issue here isn’t the actual state of City Hall finances in mid-2013. That topic remains open to dispute. The point is that Bradley was a key player in the making and executing of policy that helped lead to City Hall’s recovery from the Great Recession.

Policy-making, of course, is politics at its roughest. However, no one at the time publicly beefed about Bradley’s performance.

Three things happened within 18 months of the “going-concern” paragraph.

Fresno’s bond rating, at one time at or close to junk-bond status, began to rise. Wall Street, ever watchful of Fresno’s spending habits, grew more confident that adults were in charge at City Hall.

The local economy picked up, as did city revenues. The politicians began to spend again. They were overjoyed, even as they forgot who got them through the financial storm.

And Lima in September 2014 moved from the Airports Division to assume the top spot in the Finance Department. It quickly became clear to anyone watching closely at council meetings that Lima and Bradley shared two things in common: They’re take-charge administrators; they’re confident in their conclusions.

None of this is to suggest that City Hall’s financial books have been rocked only by things – interest rates, mortgage policy, national debt – outside local control.

The “negative fund balances” controversy, for example, took several years to fix and contributed greatly to Wall Street’s jaundiced view of the city. Explaining the controversy in understandable language is probably impossible. Identifying the culprits is a can of worms no one wants to open.

Did Bradley, author of the “going-concern” paragraph, take the fall for the negative fund balances controversy?

Did Bradley forget that an assistant controller reports to the controller?

Did Bradley look askance at some financial stratagem conceived by Lima and the Administration?

Does Swearengin, despite having only three more months in office, want Bradley gone so she can fill the job with someone more to her liking?

Or, is there hidden trouble with City Hall’s books?

I want to know.

I’m guessing Wall Street does, too.

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UPDATE:

The source close to events said Bradley was told by Lima that she would be put on paid administrative leave for an indefinite period.

Lima told Bradley on Thursday that he wanted his own assistant controller and reminded Bradley that she was an “at will” employee, the source said.

The source said Lima gave Bradley the choice of signing a prepared letter of resignation or being fired.

Bradley declined to sign anything and is seeking legal advice, the source said.

She then cleared out her desk on Friday. The source said Bradley’s colleagues (but not Lima) were in tears as she gathered her things.

It’s unclear who would want to be an “at will” assistant controller under Lima when, in a matter of about three months, a new mayor will be in charge, and the controller’s position and the assistant controller’s job will be as secure as a June bug in July.

That mayor will be Brand or Henry R. Perea.

George Hostetter
George Hostetter is The Sun’s Fresno Civic contributor – covering the City of Fresno, County of Fresno, and Fresno Council of Governments.

4 Comments

  1. I’d say there’s trouble with the books. The City is spending money that I don’t think it has to beef up its cop shop.

  2. Change is needed in city leadership. Unfortunately, both mayoral candidates have been a part of the problem for years and are unprepared to do what is needed to prepare the city for long term growth and stability. It would hurt their constituencies and prevent reelection which is the primary concern for both.

  3. Finance isn’t about a popularity contest, finance is about morality and ethics that, clearly, Lima has forgotten about. To fire someone as strong in not only understanding the big-picture, but also never sways from her ethics is a massive mistake that he will soon realize. The amazing financial team that Lima has split apart will be felt all over the city, not just in the finance department. It is a truly sad thing when a person is taken out of a position that they were made for, that they were productive in, that they inspired countless people.

  4. Where else can you be fired and be placed on “paid” administrative leave?

    True “At will” means no job, and an unemployment check. Obviously, “government employment” means something different. Not their money why not?

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