Before Arrest for Theft, "Buzzkill Bob" Due Often Warned Covington of Financial Situation
Covington Finance Director Bob Due was recognized by the city commission on August 6 for being given the Award of Financial Reporting Achievement from the Government Finance Officers Association of the United States and Canada.
On August 23, he was booked into the Kenton County Detention Center, accused of stealing approximately $300,000 from the City in an alleged scheme that dates back to 2010.
If true, the charges could land the 63-year old Covington native in prison for twenty years.
It's a dramatic shift in perception of a man who was always at the forefront of City Hall's warnings over the past few years that the City of Covington's finances were in deep trouble.
Hired in 1999 after fifteen years of handling the finances of the Talbert House in Cincinnati, Due's expert understanding of numbers was often called upon during city commission and special meetings to explain the significance and details of revenue, expenditures, taxes, and other issues.
Due's expertise fell short, however, in continuing an alleged criminal operation on the other side of the wall from the commission chambers. He was questioned late Friday afternoon when employees in his own department discovered what they viewed as discrepancies in some expenditures and by Friday evening, Due was able to watch his face plastered all over the news on a TV in the Kenton County Jail.
Due's role at City Hall increased in prominence beginning in the summer of 2011 when the City of Covington faced the very real prospect of bankruptcy. He and City Manager Larry Klein toured the city, speaking to every neighborhood association and other civic groups in what was dubbed the "budget roadshow", a call for quick action to bring the city's financial state back from the brink of disaster. The controversial roadshows were in support of a budget proposal that called for $1.2 million in cuts to the police department, $1.5 million from the fire department, and $900,000 from public works. Twenty-two employees in the three departments would face layoffs and other positions would go unfilled. Employees who survived the cuts would be forced to pay more for health care benefits.
The fight over the 2011-12 budget ultimately led to the resignation of then-Mayor Denny Bowman and created lasting tension between the city administration and its public employee unions.
The financial situation, while a little farther from bankruptcy, was still far from rosy in the fall of 2011. "This is the third year in a row that revenue has decreased from the year before," Due told the city commission in October of that year. "This is indeed a crisis."
The allegations against Due indicate that his theft of city money began the year before that warning.
It was rare that Due spoke at city meetings without the cause being a dire warning about the city's fiscal health, a consistent problem that once landed him in the hospital suffering from what was once described as a possibly stress-related illness.
In a December 2011 meeting, he dubbed himself, "Buzzkill Bob". The city commission started that meeting by honoring the Holy Cross football team, fresh from its state championship. Due ended the meeting with news that the city was nearly three-quarters of a million dollars worse off than it was the year before. He projected that by 2017, Covington would face a cumulative debt of more than $19 million.
A month later, more warnings from Due were announced at City Hall following a startling report from the audit committee. In the early weeks of the 2012-13 fiscal year, the city could run out of cash, Due said. "Come June 30, 2012, we may have a three or four hundred thousand dollar general fund balance and we'll have a million dollars less in revenue on July 1 and our health care and pension costs are going up," he warned.
Due's understanding of financial reporting was also called upon when Covington City Hall and the Housing Authority of Covington sought to improve communication between the two entities in March of 2012. A side organization affiliated with HAC, called Neighborhood Investment Partners, was a point of contention at the joint caucus meeting. "You want to be as transparent as possible," Due told HAC's leadership. "I do not see a footnote (about NIP in the annual audit). For the benefit of the agency going forward, it's best to disclose these things. If I were an investor, I'd want to know about these relationships."
Back at City Hall, a plan was crafted to shift Covington's financial health for the better. Facing a $2.5 million deficit for the 2012-13 fiscal year, then-Mayor Chuck Scheper made a call for zero-based budgeting, in which each line item is heavily scrutinized. Due heeded the call. "We'll be asking, what do you get for that investment (in line item reviews)? This is a process you don't get through overnight but it's one we have to begin," Due said.
A few months later, in May 2012, with the same deficit still projected, Due returned in warning mode. "If we have a year like Fiscal Year 10 or 11, we'll be in a negative fund balance," he told the city commission. He announced that he and Klein developed a plan that would require 5% cuts to public safety and to all other departments, likely leading to more layoffs, which would save roughly $2.3 million.
He also lauded his department's effort to implement the zero-based budgeting in which every expenditure over $5,000 required justification. The charges leveled against Due on Friday include suspicion that he made deposits of $8,000 - $10,000 (and sometimes more) from city funds to himself.
Ultimately, across-the-board budget cuts, new union contracts, elimination of the city's 911 dispatch center, and a reorganization plan spearheaded by Mayor Scheper and a report by Management Partners staved off another flirt with bankruptcy.
And then, things started to look up. And Buzzkill Bob even started to smile and laugh at city meetings.
In May of this year, Due and Klein presented a plan for what they called an "historic" budget, one that called for long overdue investment in the city's neglected infrastructure and laid out a plan to improve the quality of life in the city.
"I'm really excited about this budget," Due said. "It's a paradigm shift and a real opportunity." Even the departments that had previously been raided in leaner times would see their budgets beefed up. Firefighters and police officers would be hired, new sidewalks would be constructed, and economic development would be increased.
It's an ambitious plan that was adopted by the city commission.
It's a plan that now seems unlikely to involve Due, who has been suspended without pay indefinitely while his legal case plays out. Instead of reporting to City Hall, he is to appear in Kenton County District Court on Monday morning.
City Hall officials and elected leaders were clearly shaken Friday after learning that the man who helped navigate the rough waters of economic uncertainty, who reorganized the finance department, who transformed the use of technology and plans for more online access in his department, the man who was finally starting to smile at public meetings, may have been running a scam all along.
By Friday night, the mugshot was online and there was no smile from Buzzkill Bob.
Written by Michael Monks, editor & publisher of The River City News
Photo: Bob Due at a 2011 city commission meeting/RCN file