Crumboling Numbers: Unraveling the Fiscal Artistry in Nashville's Finances
The Metro Finance Director has placed himself at the heart of Arts Funding in Nashville, withholding $2m of arts funding until he is satisfied by how it will be used.
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The Gist
A few weeks ago a Metro Nashville employee, let’s call them “Frank”, told me that the Finance Director position at the city is, and always has been, the most powerful position in the city. As a former employee for two different Mayors here, I felt a little offended for my old bosses. But after watching a recent Metro Arts oversight meeting, I think Frank is on to something.
For those of you who don’t get your entertainment and hot goss from municipal boards and commission meetings, here’s the latest tea.
MAR 5, 2024 | WPLN: Metro Human Relations Commission says Metro Arts’ 2023 funding decisions were illegal
MAR 5, 2024 | Nashville Scene: MHRC Director Accuses Law Director of Weaponizing Metro Legal Against Him
FEB 27, 2024 | Nashville Scene: New Mismanagement Claims Imperil Metro Arts Budget
To keep it really short, last July the Metro Arts Commission voted for the first time to lower the amount of funding that large arts institutions get in the city, while increasing funding for its nine-year-old THRIVE program that supports small arts orgs and individual artists. All hell broke loose.
For precedent, please see this Tennessean Article from 1998 about the aggressive lobbying actions large arts organizations took when the commission voted to reduce the Symphony’s government subsidy by 28% to $207,000. Mayor Bredesen reported that in response he called Arts Commission ED Tom Turk and told him “I respected the process that the commission had gone through, but that I didn't agree with the outcome."
After being alerted to the budget cuts to large orgs by the sole Arts Commissioner who noted “Nay” on the measure, Will Cheek III (that’s indeed the Cheek in Cheekwood), Metro Legal claimed their vote to diversify recipients of art grants was unconstitutional. Like, the US Constitution. 🧐
At a December 14, 2023 Arts Commission meeting, Will Cheek III acknowledged while the alleged unconstitutionality of the July vote is what gave the commission the authority to overturn the decision that favored small arts orgs, what ultimately swayed the other commissioners to reverse their funding model was that after hearing from the organizations how had their budgets cut. The reduction of low six figure funding was an issue for these large arts organizations, with budgets ranging from $9m to $28m yearly, because they had “gotten used to it.”
Legal’s reading of the unconstitutionality of the vote has been refuted by outside counsel with constitutional law experience hired by the Metro Human Relations Commission (MHRC). The MHRC report details that, in fact, the reversal of the July decision to allocate more funding to smaller organizations (and reduce year over year funding for larger orgs) was plausibly a violation of Title VI of the Civil Rights Act.
But it’s that last article on that list made me think of what Frank said about the Director of Finance. At that Metro Arts Oversight meeting on Feb 26, Metro Finance Director Kevin Crumbo explained that he is withholding $2m of arts funding because there allegedly may be a future deficit of $300k in the department’s expenses once all their invoices come in.
He doesn’t explain how, despite not completing an audit, he can be certain enough of this figure, and indeed the existence of an alleged future deficit, such that he is unilaterally justified to withhold arts funding that would go to arts organizations of all sizes in Nashville — until he feels the Arts Commission “can demonstrate its operations are stable and that its financial affairs are in good order”.
Mr. Crumbo was asked in the oversight meeting if he could objectively oversee an audit of Metro Arts, which first came into the spotlight of Metro Legal and Finance only after it voted to reduce funding for large arts institutions. Mr. Crumbo was previously the Board Chair and Treasurer for the Nashville Symphony, and his wife is on the Board of Directors for Cheekwood, both organizations who had their funds reduced by the Arts Commissions July 2023 vote.
Mr. Crumbo's response is reproduced verbatim below.
“My wife and I both well-known patrons of the Arts here here um in Nashville um I've been the chair of the Nashville Symphony I've assisted a lot of other Arts organizations here and uh both of the times that I have come to the Metro Government um I had to resign uh boards including the Symphony board uh that would be a conflict with with my work here so um in both instances of returning here I was unanimously confirmed by um the uh rules committee and disclosing to them that I would be resigning and avoiding conflicts unanimously confirmed by both councils in the same way so there is no conflict there and there's no conflict with any work that my wife does in the community either.”
Mr. Crumbo’s reading of the Metro Code of Ethics is a perplexing one. While his comments reflect an attitude that once “cleared” by the Council’s Rules Committee for an appointed position and confirmed by Council, one is unable to commit ethics violations. But in reality, the Metro Ethics code are conditions that Metro Employees must follow on a daily basis, immunity from ethical violations is not conferred by appointment nor disclosure of those conflicts.
The remedy for conflicts of interest is recusal on decisions that could benefit oneself or relatives, and the entity with jurisdiction on if this is done properly is the not the Metro Rules Committee, nor the Director of Finance’s opinion, but The Metro Board of Ethical Conduct.
Additionally, Crumbo neglected to disclose in this Metro Arts Oversight Committee Meeting that the “work that my wife does in the community” includes being a voting member of Cheekwood’s Board of Directors.
Nashville is a small town. Few people would be appointed to positions if the requirement was they had no potential conflict of interest that could arise with the city government. But one could argue that Crumbo is potentially violating these clauses of the Metro Ethics Code:
2.222.020 - Standards of conduct.
h. Shall not use for personal gain, or for the gain of any family member or employer, information pertaining to metropolitan government which is not a matter of common knowledge, or use his or her position to secure information about any person or entity for any purpose other than the performance of official responsibility;
i. Shall not use their metropolitan government positions improperly to secure unwarranted privileges or exemptions for themselves, relatives or others
As Metro Legal’s representative stated in a February Arts Commission meeting, the proper way of determining if an ethics violation is taking place by Mr. Crumbo is to file an ethics complaint and let the Board of Ethical Conduct make a ruling.
The Financial Scandal That (Probably) Wasn’t
If you’ve been tracking this Metro Arts story hardcore, you’ve maybe heard $300,000 bandied about as a “deficit” that Metro Arts is running. This is what Finance Director Crumbo is referring to at a Feb 26 committee meeting:
“The simple truth is the commission will not be in a position to make additional grant awards if its financial position is already headed to a deficit.”
This alleged “deficit”, which has not been demonstrated via any publicly made ledgers, but according to Crumbo is based on “reports of multiple [Metro Arts] employees who have alleged excess spending over budget.”
The information about the deficit is reportedly from Metro Arts employees — a strange direction for information to flow since Finance usually tracks finances, and lets employees know when they’ve run a deficit. Then again I make a habit of notifying my bank when I’ve overdrawn my account just so they’re aware, so it tracks.
While some of us might categorize these statements as having major “Big, If True” energy, Crumbo isn’t shying away from what he believes the conclusion should be if the conclusion of his office’s investigation confirms his conclusion:
“At this moment I can't see rolling into the next fiscal year with these conditions still existing and trying to tell the taxpayers that we should fund more money for the arts when we can't account for what we’ve actually done in this fiscal year.”
That translates to “I am shutting this *%$# down” in CPA.
I gotta say, when Director Kevin Crumbo lays out the facts, or potential facts, going on about how maybe the future numbers might not add up if you look at them from a certain angle… it’s like having a fever dream about being trapped inside an H&R Block.
But even if all of what he’s saying is true, that $300,000 was was allocated in excess of available funds, meaning a potential future deficit, which would require Council to transfer Metro Arts .009% of the city budget to fix, I’m left with an exasperated:
I think I’m not alone here.
The Chair of the Public Facilities, Arts & Culture committee, Joy Styles, articulated this at another committee meeting held the same day about the risk of a potential future deficit in the Metro Arts Department.
“I heard $300,000 or something to that effect. If that’s the case, we have $2,000,000 to give to artists. $300,000 is not enough to make me feel concerned.”
It seems like there is $1.7m that could be going to the arts that’s being held up because Mr. Crumbo has the ick.
Council could also, at any moment, so choose to make the department whole by adding this $300,000 sum to their budget.
But here’s where the scandal collapses in on itself just like the last season of House of Cards.
When asked by Council Member Styles to explain the “deficit”, the Metro Arts Executive Director explained in the Feb 26 public hearing that this “$300,000 deficit” is a mislabelling. He explains that during a hiring freeze in Metro, his office hired consultants to complete the tasks for approximately the same amount. So quickly the charge of a $300,000 “deficit” looks more like, I don’t know, non-best practice action of “crossing spending line buckets”?
Stopping all funding to the arts because someone charged funds to the wrong spending line is definitely the best use of our Finance Director’s efforts.
Oh who dropped this here?
Feb 5, 2024 | Tennessean: Nashville pauses surveillance tech after contract skirted rules
But it’s not hard to see why the arts funding is of such interest to folks like Crumbo.
Who Audits the Auditors?
As someone who helped manage over $5M of budget over a relatively brief period of time in Metro Government, let me clarify for folks that no one is just given a checkbook when they run a department. The city doesn’t give you a debit card and make you pinky promise not to do anything bad with it.
Every invoice gets sent in to Metro Finance. Every check comes from Metro Finance. Every invoice over $2,500 and under $25,000 requires multiple bids from different vendors, and everything over that is linked to a contract which is linked to a procurement process or grant. You can’t get around those processes, unless you’re, you know, the police department. And all of that money is supposed to be spent within certain spending lines for certain purposes.
A big reason, and a good reason, why the government is so slow to act is that it is hard as hell to spend government money. When you’re a government employee, it’s not your money – it’s the public’s. So when a department is accused of spending $300k more than they had, as a former Metro employee, my reaction is “say more…”
You shouldn’t really be able to just spend money you don’t have, or money you have for reasons you shouldn’t, and the department responsible for stopping that is… Metro Finance.
The way that people in government misappropriate funds is not by going to an ATM with a government credit card, it’s by using their authority to spend money, in otherwise legal ways, with people or groups that financially benefit them directly, or reward them for doing that.
Most of the Metro Ethics code is about pledging not to do this very thing, and politically appointed positions (as I was in the Mayor’s Office, or Mr. Crumbo is in Finance) are required to file disclosure reports. These reports detail any “conflicts of interests” so that you won’t be able to benefit from where you allow money to flow.
To reiterate, Mr. Crumbo was previously the Board Chair and Treasurer for the Nashville Symphony, and his wife is on the Board of Directors for Cheekwood, both organizations who had their funds reduced by the Arts Commissions July 2023 vote, which Crumbo’s office is working to ensure does not go into effect.
The Metro Arts Executive Director has publicly asked whether or not this creates a conflict of interest for Mr. Crumbo, and if he should recuse himself from an audit of Metro Arts since multiple organizations he has ties to could benefit from the findings of his audit. Mr. Crumbo does not appear to have taken the advice and appears to be meeting extensively with Metro Arts employees. Cool. Cool Cool Cool.
Why Do You Have to Declare Taxes If The Government Already Knows How Much You Make? And Other Financial Things That Confuse Me
It’s an open secret in the Nashville government that Metro Finance is in need of a fundamental overhaul of how they track things like “spending authority”, incoming funds, outgoing funds, salaries, expenses, and collating them together so you can actually know “How much money do we have?” To put it simply, whatever software they’re using, they’d be better off if it was a free trial of Quickbooks.
When I was helping to oversee a budget in the Mayor’s Office, I was shocked to learn that Metro’s Finance department, the centralized agency that cuts checks, stamps that “funds are available” before a grant resolution is sent to the City Council1, and generally is in charge of the $3.2B yearly budget, had no ability tell tell us how much money our little office had at a given time. They didn’t seem to be able to do it holistically for any department. The vibe was more or less “that’s a you problem.”
From what I could gather, in Metro Finance there was one system that tracked things like invoices, another that tracked spending allocations, another that tracked salaries, another expenses. Nowhere could you simply look up a department and see: “How much money was X department given in 2023, and how much of that have they spent?”
There was nothing that put it all together and gave you a big picture, none at least that we were given as an office outside of Finance.
So when it’s alleged that a department is $300k in the red, perhaps Metro Finance technically has access to all the information necessary to tell that, but it has not built a system to be able to actually tell that automatically – or better yet, stop it from happening. And it very, very, very much could have that.
When asked in the Feb 26 oversight meeting why his office was uncertain what the outstanding obligations of Metro Arts and why therefore he felt confident withholding $2m of arts funding, Crumbo expressed uncertainty regarding the promises that might have been made by Metro Arts in previous years. He stated, "we just don't have visibility to that that's not what our finance department does."
But that is precisely his job description.
Metro’s Charter is quite clear about the of Finance Director:
Sec. 8.103.
(e) Examine all contracts, purchase orders and other documents which would result in or involve financial obligations against the metropolitan government, and approve the same only upon ascertaining that there is an unexpended, unencumbered and unimpounded balance in each such appropriation and allotment to which they are applicable, sufficient to cover such potential obligation.
(f) Audit before payment all bills, invoices, payrolls and other claims, demands or charges against the metropolitan government and approve the same only if proper, legal and correct, and duly authorized by appropriations or allotments of appropriations.
Don’t get me wrong, Finance folks at Metro are pros, and they do miracles with what they have, but the tools that they have to work with are bush-league, and their tools are fundamentally not up to the challenge of managing a city of our size.
I wonder though if this is more a feature than a bug of our finance system in Nashville.
Like All Annoying Things, There’s A Word For This
There’s a term in academia called “knowledge hoarding.” A literature review of knowledge hoarding in the Journal of Innovation and Development explains that it is "the behavior of individuals who are unwilling to share their knowledge with others in the organization."
The lit review details how people engage in knowledge hoarding because of a desire for power, job security concerns, internal competition, a lack of trust, and the fear of losing their own value within the organization. These factors contribute to a culture where knowledge is withheld, impacting the overall effectiveness and efficiency of the organization.
What’s quite strange is that the Finance Department has access to information about every cent all departments spend because they cut the checks, all major contracts with vendors are required to have the Finance Director’s signature on them. It’s public information what a department is allocated, and all votes on things like Arts grants are public information.
But the Finance Department seems to refuse to spend the energy to collate this information in a way that would be helpful for departments to run smoothly. This would be helpful for the City Council to know if their allocations are being spent, helpful for the Mayor to know if his initiatives are being executed, and helpful for the public to ensure that our tax dollars are being used how we want them.
All that government really is, at the end of the day, is moving around pools of money to improve our society. Understanding how that money is moving (or not moving) is tremendous power.
Why Is It This Way, and What’s To Be Done?
It makes you ask cui bono, who benefits in this chaotic ambiguity? If Metro’s finances were tracked cleanly, centrally, in a real relational database, open to all metro employees, or better yet the entire public, being the Director of Finance is effectively a data visualization job. You become the king of pivot tables, a glorified CPA whose wizardry stops with VLOOKUPS. [It’s a Microsoft Excel joke just ignore it.]
I don’t think Kevin Crumbo or any Director of Finance before him intentionally set up a chaotic system like this to hoard information (and therefore power). But it sure as hell gives them an incentive not to change it.
The ambiguity allows you to say things like: “Mismanagement occurred. Trust me. Let’s fund things this way. Or else.” That’s just not possible when that information is actually public information, or at the very least open to others within the government, such as the committees that oversee these commissions, so they can make their own determination.
This is not possible to do if Crumbo, or in his defense, past Directors of Finance, were to fulfil his job description to:
Sec. 8.103.
(b) Maintain accounting systems for the general services district and the urban services district of the metropolitan government, and for each department, office and agency thereof, in accordance with generally recognized governmental accounting principles and procedures, keeping accounting records for and exercising financial and budgeting control over such department, office or agency.
I am about as far from a financial expert as they get. But a system wherein I could not, as a Mayor’s office employee, with funds designated from clear channels for clear purposes, with expense invoices flowing directly to Finance, ask a simple question “How much money do we have left?” and get a reliable answer… I pray to God that is not a “recognized governmental accounting procedure.”
The absurdity is I was able to build the accounting system I needed with a free trial of the software “Airtable” which consistently proved more accurate than what Finance was able to provide.
So when Finance takes 6+ months to conduct an audit, and is withholding $2m of arts funds in the meantime, until such time the department “can demonstrate its operations are stable and that its financial affairs are in good order”, I am exasperated.
Finance is holding the Metro Arts Department to vague and subjective standards that even they would not live up to, and it is disingenuous to pretend they are the only department with such issues. When the core financial apparatus of our city is in disarray, in truth no department can be said to have its “its financial affairs in good order”.
Former Vice Mayor Jim Shulman had an ambition to set up an “Ombudsman Office” for Nashville that would track how Metro grants and programs were actually implemented. He was frustrated that the city council, in efforts to help the city thrive, perpetually felt like it was throwing spaghetti at the wall, unsure if the programs they were funding were being done effectively, or if departments even spent the money at all.
I wish that our Finance Department would take a longer look at their own practices, and how they could improve and help our city, rather than picking fights with departments that are victims of Finance’s own weaponized incompetence. Scrutinizing Finance’s creaky, decentralized, embarrassment of a financial management system for a $3.2B city budget is the boring as paint drying ad hoc city council meeting we really need (I’ll bring refreshments).
A standing correction: This post refers to the Nashville Metro Council as a “City Council”. It is, in fact, a City-County Council, known colloquially as the “Metro Council.” More information on this distinction can be found in this previous post.