Nearly two months after Alameda City Manager Debra Kurita resigned, the island city is still trying to sound the depths of the financial crisis caused by her falsely inflated budgets.
Kurita quietly left her job Feb. 26 with little more than a one-paragraph public statement, which was posted on the city’s website. What Kurita did not mention in her statement was that she decided to resign after three intense, closed-session meetings to discuss her job performance. At issue was the city’s 2008–2009 budget, which suddenly turned up at least $2.1 million short.
Councilmembers have been tight lipped about what was discussed during those meetings, but it’s safe to assume there was a lot of conversation about Kurita’s questionable accounting skills.
The unexpected budget shortage, coupled with revenue losses due to a nationwide economic downturn, put the city into a financial crisis. In addition, the city may be on the hook for $30 million in lawsuits over the sale of Alameda Power & Telecom and the 2005 death of Dr. Zehra Attari, who inadvertently drove into the estuary on a cold, rainy night because the city had not properly posted warning signage at a boat ramp at the end of Grand Street.
“This was on top of an already grim situation,” said Councilmember Frank Matarrese. “There’s going to be real impacts. We’re going to be cutting services and it’s going to hurt.”
The council has not yet identified which services will be cut and whether there will be any layoffs of city employees.
The problem occurred when Kurita failed to account for rapidly increasing worker’s compensation costs. Alameda’s workers’ compensation claims had been rising by half a million dollars annually for the last three years, and each year Kurita failed to increase projections to compensate for the increases. As a result, the city’s general fund gave a false impression of financial health.
It is uncertain whether Kurita deliberately doctored the budgets to make it appear there was more money in the general fund or if it was simply a colossal blunder. Kurita did not return several calls from the Daily Planet to explain what happened.
Interim City Manager Anne Marie Gallant said it is more important to solve the city’s financial problems then it is to cast blame. “There are a lot of urban legends about what happened, but the situation is a fact, and we need to fix it,” she said.
However, some in Alameda are upset that Kurita, to whom the city paid an $180,000 annual salary, was able to leave the city with six months’ worth of pay and full benefits.
“It’s disgusting,” said David Howard, chair of the watchdog Alameda Community Group. “It sounds like she was hiding information and misleading the council. Why should she be rewarded for that?”
Deputy City Attorney Terri Highsmith said Kurita was guaranteed the severance pay and benefits according to her contract with the city. “It was a standard contract,” Highsmith said. “It’s common for city managers to have such contracts, because there is a high turnover in that position,” Highsmith said. “She is guaranteed six months’ salary and benefits unless she is fired.”
The severance deal was a little hard to take, and there may be some policy changes that would prevent similar situations in the future, said Matarrese. “Alameda honors its contracts, and it will continue to do so,” he said. “But I don’t know if we will be making contracts like that in the future.