The Fernley City Council last night voted to terminate the employment of long-time Finance Director/City Treasurer Bonnie Duke, citing an unforeseen budget shortfall and ongoing irregularities in the city's financial reporting as the primary impetus for the ouster.
Duke was present for the meeting along with legal counsel and a number of supporters, but neither she or her counsel made any statement during the proceding. The council also had a packet of eight letters voicing support for the city's chief financial officer that were submitted in late February after Ward 1 Councilwoman Kelly Malloy requested the agenda item to consider Duke's continued employment with the city.
The $455,000 revenue shortfall was addressed in a special council meeting earlier this week when it was determined that a reduction in the city's workforce had to be accomplished in order to try and close the gap. In all, 14 city employees will be cut, about half through layoffs and the remainder through attrition.
At the Wednesday regular meeting, the council recessed for a closed door legal briefing that lasted about 45 minutes. While it was not clearly stated, the break took place just prior to the council's consideration of the agenda item relating to Duke's possible termination.
When the session reconvened, the council took up the matter of the Finance Director's performance. As the discussion progressed, it became clear that at least three on the council were leaning toward termination.
Malloy moved forward and made a motion to terminate Duke, which was supported by Donald Parsons, Ward 2. Mayor Todd Cutler then opened the process for council discussion.
"February 14, Greg Evangelatos took over as Interim City Manager and one of the first things he learns is that we're in debt $450,000," said Parsons. "This was a surprise to everybody."
Malloy concurred and indicated that she is "one course" shy of an accounting degree and has some auditing experience in her background. She said that in reviewing the city's financial statements she's found some things that may harm the city.
"There have been warnings in the financial statements that trouble is coming," Malloy said. "I've done my due diligence in looking in to this matter and I've come to the conclusion that this change must be made, including some reasons I can't go into here."
Curt Chaffin, Ward 4, suggested taking a more studied approach to making the decision and recommended the city undertake a forensic audit. Parsons then asked if Malloy would be willing to await the results of a forensic audit, but Malloy expressed doubts that the city could afford such an undertaking.
The in-depth audit could cost about $25,000 and be a rather involved and lengthy process, Evangelatos told the council.
"With the budget notification we've received, I don't think we could pay for it," Malloy said of the forensic audit procedure. "I'm concerned about the city's ability to repay the debt we've incurred."
Mayor Todd Cutler declined to open the matter for public input indicating he feared "it would become a circus."
When the matter was put to a vote, the council approved Duke's termination 3-2. Malloy, Parsons, and Cal Eilrich, Ward 5, voted in favor of the measure. Chaffin, and Monte Martin, Ward 3, opposed the termination.
As the results of the council action became certain, Duke rose from her seat and handed over her city identification badge to Evangelatos and she left the council chambers.
Later in the council session, there was consideration of a proposal from Malloy that would see the Treasurer's office consolidated into operations of the City Clerk. But with next year's budget deadlines looming, many on the council expressed skepticism about the option. However, the council did ask that city staff gather some information on how that could be accomplished and the item would be discussed further at the next meeting March 18.
The council also approved a measure that would authorize Evangelatos to hire an accounting firm or qualified consultant to step in and handle the city's finance function on an interim basis so that budget preparation can carry forward.
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