News Summary
Jefferson Parish is experiencing severe financial challenges following the withdrawal of its top bond rating by Moody’s and S&P Global Ratings. This move came after the parish failed to file financial audits for the years 2023 and 2024, complicating its ability to secure funds for essential projects. President Sheng attributed the issues to personnel problems in the finance department, which is overwhelmed by new financial challenges. The parish is now taking steps to address its audit deficiencies through major contractual adjustments.
Jefferson Parish is facing significant financial challenges following the withdrawal of its top bond rating by major credit rating agencies Moody’s and S&P Global Ratings. The agencies made this decision due to the parish’s failure to file financial audits for the years 2023 and 2024. This withdrawal positions Jefferson Parish in a precarious situation, as it will now face greater difficulty in securing funds for essential capital projects.
The Louisiana Department of Treasury indicated that the parish’s initial missed deadline for its audits was pivotal in the decision to withdraw its bond rating. Losing this rating has been likened to receiving no credit at all, significantly damaging the parish’s financial standing. Jefferson Parish is not currently scheduled to sell any bonds, which has provided President Cynthia Lee Sheng with some breathing room, but the underlying issues remain urgent.
Sheng emphasized that the withdrawal of the bond rating is largely a result of personnel problems within the parish’s finance department rather than alarming financial concerns. The department has been dealing with the complex task of managing millions in emergency aid related to the COVID-19 pandemic and natural disasters, including hurricanes Francine and Ida. The volume of financial resources that the department is navigating in 2023 has increased to 15 times what it typically handles, contributing to overwhelming circumstances.
Several factors have compounded the situation within the finance department. Reports indicate issues such as high employee turnover, inefficient operational protocols, outdated accounting software, and a nationwide accountant shortage. These challenges created an environment that further hindered timely financial reporting and auditing.
President Sheng pointed out that this year is notable for Jefferson Parish, as its annual budget has exceeded $1 billion for the first time. To address the pressing issue of the financial audits, the parish has enlisted the services of Deloitte and Touche to reorganize the accounting department and upgrade its outdated software, a project costing around $5.7 million. Additionally, EisnerAmper has been contracted for over $700,000 to ensure that the overdue financial audits for 2023 and 2024 are completed. The 2023 audit is anticipated to finish by September 2025, while the 2024 audit is expected to conclude by the end of 2025, both arriving approximately six months late.
As part of restructuring efforts, Finance Director Tim Palmatier has transitioned to a role as a technical advisor, paving the way for Victor LaRocca to take the interim role of finance director. A new accounting director is also slated to be appointed by August 2025 to stabilize the finance department.
Council members have expressed concern regarding the bond rating withdrawal. At-large Council member Jennifer Van Vrancken has described the event as “unprecedented,” highlighting potential risks to the parish’s financial stability. Fellow council member Scott Walker has referred to the scenario as a “perfect storm” that necessitates immediate action to restore confidence in financial management.
Jefferson Parish has been under increasing scrutiny, as Inspector General Kim Chatelain is drafting a letter to the council about the ongoing failure to file annual financials for three consecutive years. Jefferson Parish previously held a bond rating of Aa1, one of the highest available, marking the recent withdrawal as a noteworthy shift in its financial landscape.
The implications of this bond rating withdrawal will extend beyond the current fiscal year. Even once remedied, the record of the withdrawal will remain on Jefferson Parish’s financial history, potentially complicating future borrowing and financial endeavors.
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