Portola Valley launches restructuring amid staffing and finance-operations crisis | November 17, 2023 | Almanac | Almanac Online |


News - November 17, 2023

Portola Valley launches restructuring amid staffing and finance-operations crisis

by Neil Gonzales

Portola Valley Town Hall is launching a major restructuring effort as it tackles an unprecedented staffing exodus and widespread concerns with its financial operations — challenges that are jeopardizing how the town conducts business and serves its residents.

Staff turnover just this year has run high while an accounting consultant contracted as part of what's been dubbed the "Reset - Refocus - Restructure" effort has found the town deficient in a multitude of finance-related areas.

Mayor Jeff Aalfs knew Portola Valley was facing steep hurdles but said he didn't realize the full extent of them until Pleasant Hill-based Krisch & Company detailed its fiscal findings and recommendations in a report submitted early this month to new Town Manager Sharif Etman. "There's a lot of work to do here," the mayor said during the Town Council's regular meeting Wednesday, Nov. 8, when he and his colleagues took up the staffing issues and Krisch report.

"It's frustrating," Aalfs said. "It is not for a lack of effort. It's also, I would argue, not for a lack of oversight. We have been paying attention to this and realizing there were problems. I will say I was not aware of all the problems this (Krisch) report's identified. There is more work than I realized at the time, but I'm really glad that we have this in front of us."

Filling staff posts

According to a town staff report, Portola Valley has experienced a turnover rate of nearly 70% in 2023.

The departures have "significantly impacted town operations and continuity of leadership," staff said in its report. "There is also the loss of connection, institutional knowledge and the ability to provide services to the public. Staff turnover and the continued needs of the community and our residents, in turn, have caused stress for the remaining staff as they continue to serve the town."

Etman just recently filled one of those vacancies when he took the reins as the town manager on Aug. 30.

The staff report noted that the assistant town manager, town attorney, and building and planning director also had left.

Among Etman's immediate actions as town manager was hiring Jon Biggs as interim building and planning director, staff said. But Biggs is a retired annuitant, meaning he can only serve for a certain number of hours on a short-term basis due to California Public Employees' Retirement System guidelines. The hope is that a permanent building and planning director can be hired before Biggs is expected to leave around late February.

Other recent hires are an administrative operations employee at the front counter, a second senior accountant and a contract finance technician, staff said. As of Nov. 1, the town still had vacancies for a senior management analyst, an associate planner, a development review technician and a maintenance worker.

Part of the town's endeavor to regroup is to have existing staff undergo professional development and training with the goal of improving service to the community.

This training, which the town calls "P.V. Refresh," will begin Monday, Nov. 13, and go until Nov. 22. Things it will cover include:

• Getting to know other staff members and the council.

• Creating a statement of values.

• Emergency preparedness.

• Going over systems or software related to business licenses, permitting and finance.

• Completing state-mandated and other critical training.

Early next month, the town is planning a community event where residents can meet all the staff.

Fixing financial functions

The staff shortages, new software and lingering effects of the pandemic have set the Finance Department and its operations behind in a number of ways over recent years, staff said in its report.

The setbacks have included delays in the town's financial reporting and completion of annual audits and have "impacted other important operations," staff said.

But despite that, the town manager told the council Portola Valley remains in good financial shape.

"We are not broke," Etman said. "Our finances are fine. We are just behind, and so we need to get up-to-date. But we are not running out of money. We are not bankrupt. We just need to get caught up, up-to-date, in compliance and get us our reporting that we need and the things that we need to get done."

Those tasks are many and varied, however.

Among the findings and recommendations in the Krisch report are:

• Annual audit reports: The town is several years behind on producing audited financials. But the town will not be able to do this until other issues identified by the Krisch review are addressed.

• Bank reconciliations: The town is several months behind on these and should complete them immediately. Moving forward, the town should install procedures to perform reconciliations in a timely manner.

• Budget-to-actual reports: These documents are not being provided to town management or the public as they should. Town staff should compile these quickly to make sure it's on budget and to let the public know of revenue and expense trends.

• Cash-handling procedures: Portola Valley should institute a formal, townwide process sooner rather than later.

• Software installation: The town put in new accounting software in 2020, but setup issues remain and should be resolved as soon as possible.

• Fee reporting and remittance: The town is behind in state reporting of fees paid with business-license taxes. The town should bring this reporting up to speed.

"This is hard to hear, hard to understand in the moment," Council member Judith Hasko said of the staffing and Krisch reports. "It's a little overwhelming, but it's a great opportunity for us to get it right going forward. Staff turnover is hard."

She said that while the town is making great steps, they still have a way to go.

"The actual financial situation, I understand the community's concern about how did we get here. I really do. Very serious concerns have been raised, and I would say each of us (on the council) has had a little time with this information more than the public so if we're not asking all kinds of questions and pounding the table part of it is that we're already starting to process in our minds," Hasko said.

Town resident Karen Vahtra, for one, applauded the town for laying out the problems with its financial functions.

"Krisch & Company have found many serious process concerns in our financial procedures," she said in an email to the council as part of public comments for the meeting. "I suspect that many of these items have been missing in our town procedures for many years. I also appreciate the approach of honesty and transparency that Sharif Etman is bringing to our town. As we become more transparent, even if the news is bad, we can openly discuss problems and hopefully reduce the tension in the town."

Mayor Aalfs spoke about how the town has been trying to take on its operational shortcomings for a while now.

"There's a long history here," he said. "And it's a history of really trying to essentially modernize our finances and other operations. I've been watching this over the last several years."

At the Nov. 8 meeting, the council also approved spending $135,000 to continue to engage Krisch regarding the financial matters until June. n

'We are not broke. Our finances are fine. We are just behind, and so we need to get up-to-date.'

Sharif Etman, town manager, Portola Valley


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