- A state auditor’s report found that, under the leadership of Town Manager Sean Stegall, the town of Cary was rife with improper spending and corrupt practices
- Even though Cary’s corruption was caused by the hired town manager, the council-manager system used by the town is associated with less corruption than the mayor-council system
- Municipalities like Cary can enact policies to reduce waste and corruption
The town of Cary appears to be a sleepy suburb of Raleigh, but it is North Carolina’s seventh-largest municipality and has an annual budget of half a billion dollars. That makes the town’s reported “oversight failures” and questionable spending big news.
A case of Cary corruption
The Office of the State Auditor (OSA) launched an investigation into Cary’s finances after receiving several tips alleging misconduct by Sean Stegall, the former town manager. The 67-page report was accompanied by 2,528 pages of appendices, mostly data on procurement card (P-card) transactions. P-cards are charge cards issued to authorized public employees to make purchases while conducting official business.
The investigation uncovered a slew of problems and corrupt practices, including:
- Overdistribution of P-cards. The report found that 62 percent of Cary employees had access to P-Cards. That is much more than the typical distribution. For example, only 10 percent of Charlotte employees have P-cards. Such widespread distribution of P-cards makes it more difficult to control their use.
- Questionable spending. Town employees made numerous purchases that were excessive or did not appear to serve town purposes. Some of those purchases included $2,206 for a “bond watch party” for town staff, $3,419 for a penthouse suite for Stegall during a conference, and $1,638 in “no-show” hotel charges for a nonbusiness trip.
- Inappropriate land purchases. Stegall made $1,101,200 in land purchases using money from the town’s Parking Technology Fund. When the assistant town manager objected that the town did not need the land, Stegall told her to “just buy the property.”
- A hostile work environment. Stegall displayed “erratic behavior and bullying” during his tenure as town manager.
While most of the town council members appear to have been unaware of Stegall’s conduct, councilmember Cori Bush had recommended to the assistant town manager that the town purchase the properties Stegall later pushed the town to buy. Stegall also arranged for the town to pay $37,301 for Bush’s graduate school expenses. Bush repaid the money in 2025 after the town put Stegall on administrative leave.
To add insult to injury, Cary paid a ghostwriter $65,653 to write a book on Stegall’s management style. The town is still sitting on 2,300 copies of the book (for which it owns the copyright) and is unlikely to break even on the $150,000 it spent on them.
How did things go so off the rails in Cary?
The city government system used in Cary tends to be less corrupt
The two most common municipal government systems in the United States are the mayor-council and council-manager. In mayor-council systems, elected officials have extensive administrative responsibilities and authority (the distinction between strong- and weak-mayor systems is beyond the scope of this report). In council-manager systems, elected officials set budgets and conduct oversight but hire a professional manager to handle day-to-day operations.
While North Carolina municipalities are evenly split between the two systems, “the council-manager plan has been the exclusive form in large cities in North Carolina (those with populations greater than 25,000) since the late 1940s.” Those cities include Cary.
A recurring theme in the OSA report is that Segall committed acts of wrongdoing without the mayor’s or most of the town council’s knowledge. That suggests that a disconnect between those elected to run the city and the manager who actually ran the day-to-day administration may have allowed corruption to fester undetected.
Are council-manager systems more prone to corruption?
A 2019 report on 20 years of corruption conviction data published in Public Administration Review by two University of North Carolina at Chapel Hill professors indicated that the opposite is true: “The findings indicate that municipalities with the council-manager form are 57 percent less likely to have corruption convictions than municipalities with the mayor-council form.”
Why would that be? The authors of the report note that, in traditional thinking among researchers, the professionalism of senior staff in a council-manager system “leads to a greater likelihood that appropriate internal controls are in place to safeguard against this type of corruption.” A post by Matt Lail for the North Carolina City & County Management Association further attributes the finding to an effective “partnership between the ethically bound professional manager and elected officials” in municipalities with the council-manager system.
If it is not the system, how does Cary fix what ails it?
Even if the council-manager system is generally associated with less corruption, the ability of Stegall to operate without the knowledge of most of Cary’s elected officials is an obvious weakness. How can Cary officials correct it, and how can officials in other municipalities prevent the same problem from happening there?
The key is in Lail’s statement about why council-manager systems tend to be less corrupt: the partnership between managers and elected officials. While officials should leave the day-to-day operations of their municipalities to professional managers, they must also be involved enough to exercise oversight effectively.
Among other recommendations, the OSA report includes several things Cary’s elected officials could do to reduce waste and corruption:
- Enact policies regarding what town employees may purchase with P-cards
- Enact a policy on council expenses for travel and training
- Require council approval for any capital purchases beyond a specific dollar threshold
- Require greater reporting of town financial records, including mandated monthly updates of town finances, to the council
Other municipalities should learn from Cary’s example and enact similar reforms to reduce the risk of suffering from the same problems.
In addition, councils should enact policies promoting greater transparency from city staff to council members and the public as well. Municipalities should avoid overreliance on one-on-one meetings between council members and staff (Stegall’s preferred approach, according to the OSA report) for conveying information. Councils that hold nonmajority meetings, which they treat as exempt from state open meetings laws, should either stop holding them or make them open to the public.
Council-manager systems are less democratic because the people who actually run the government are not directly removable by voters. Increasing council oversight of municipal managers enhances democratic accountability without losing the benefits of professional management.
