Talk about raining on a parade: instead of celebrating the fact that the city managed to end the last fiscal year with a $30 million budget surplus—following a $17 million surplus the year before—Springfield officials are instead scrambling to figure out how a $14 million investment of city funds has plummeted in value to a little over a million.
Shortly before Christmas, the Finance Control Board announced the bad news, pointing to what city officials call lousy—not to mention illegal—management by Merrill Lynch, which invested the money for the city in the subprime mortgage market. Merrill Lynch has defended the move as an "AAA investment" and says it was approved by city officials, whom the firm declined to name; the Attorney General and the Secretary of State's office are both investigating the matter.
Meanwhile, local pols are pushing for more answers about the tanked investment. Councilor Tim Rooke has requested from City Treasurer Sal Calvanese financial reports and other information, including "any background information to indicate an effort of due diligence was performed before the investment decisions were made by your office on the selected portfolios." Councilor Jimmy Ferrera has called for the control board to arrange for an independent audit of all city investments (actually, the city already pays for an annual financial audit). And new mayor Dom Sarno has vowed to look into how City Hall monitors investments, to stave off future crises.
If only there had been this much attention to details during the years when the city's finances were crashing—while the City Council approved budget after insupportable budget—perhaps Springfield would have been spared a control board in the first place.
mturner@valleyadvocate.com
