Tuesday, May 11, 2010

May 12, 2010 State Comptroller Sends Letter to Mayor Barile on City's Violations of State Law and Audit Compliance Issues

The local "news"paper and its city and crime beat reporter Bob Moore have run several stories about the May 4, 2010, council meeting. Bob has taken a week to gradually cover bits and pieces from the May 4th meeting!

Despite taking a week to cover the May 4th council meeting, there hasn't been a front-page article about the April 20, 2010, letter from the State Comptroller to Mayor Barile (click on each page above to enlarge and read) regarding the city's loan application (TRAN) and the City's continuing violations of state law and audit compliance issues. [5/14/10: See UPDATE below]

At the May 4th meeting, a portion of the 4-page letter from the State Comptroller to Mayor Sami Barile was read aloud by Administrator Cox at the direction of the Comptroller. The entire letter describes  numerous violations of state law by the city as well as audit compliance issues.

The letter adds that state approval of the city's current application for a loan/line of credit (TRAN) is conditioned on the City coming into compliance with state law, paying the "loan" back by June 30, 2010, submitting a proper budget for 2011 no later than 7/31/10, and addressing issues in the 2009 and 2010 audits as required by the Comptroller's Division of Municipal Audit. 

The letter (Page 3 at the top) notes that Stormwater, General, and Sewer Fund issues have not been  addressed  despite the Comptroller's direction to the City to contact Municipal Audit to resolve these issues. The General and Sewer Fund "issues" apparently relate to improper interfund loans in 2009.  NOTE: The local auditor reported these improper interfund "loans" with the 2009 audit----but failed to report similar improper "loans" in 2007 and 2008.

With the end of the City's yearly money-switcheroo gig,  the City is being forced to comply with state law in obtaining outside loans and in making any interfund loans.

Surely, a lengthy front-page article with a Bob Moore byline and a banner headline (City Violates State Law and Fails to Address Audit Issues) is coming soon to report on the Comptroller's letter. 

Nah, a "news" article now would be nothing more than a press release with a few pithy remarks from some "official" about how everything is being taken care of and it's time to "move on."  The official line/spin would be that we can't and don't want to find out who ordered the illegal transfers/loans; we can't and don't want to find out who, in addition to the auditors, failed to report that illegal transfers/loanswere being made; and we absolutely don't want to hold anyone accountable for years of illegal transfers/loans!
And would the "news"paper try to find out who approved the unauthorized transfers/loans, which individuals and employees knew of the unauthorized transfers/loans, why no city department head or employee reported the unauthorized transfers/loans, and why the auditors didn't report the previous violations?  Not likely. More to come.  For background click here.

[UPDATE 5/14/10: Yesterday, nine days after this "news" broke at the May 4 council meeting and just one day after my initial blog post on this topic, the Trib at long last ran a story on the Comptroller's letter.  Bob Moore's belated "news" article was full of official spin and quotes but did contain some very interesting statements.

If the article is correct, Budget Director Brian Janish and former/interim city administrator Lynn Wampler "executed" a $649,000 sewer to stormwater "loan" in late 2009 or very early 2010, apparently without getting council approval as required by state law and without first submitting the loan to the state as required by state law. Janish and Wampler took this action knowing it was in violation of state law and then graciously "reported" the issue and asked for state "guidance" about their knowing and intentional violation of state law. Just ponder that action for a while.

The article also briefly mentions a temporary "transfer" of $1.24 Million from the sewer fund to the general fund in 2009. The "news" article states that this transfer--carefully avoiding the word "loan"--was made "to avoid reflecting a negative cash balance" in the general fund? The article does NOT mention that this "transfer" was also a violation of state law.

The article adds that at the end of fiscal year 2009 "the money in the general fund ($1.24 Million) actually belonged to the sewer fund."  Can you say robbing Peter to pay Paul?

And the City executed these illegal/improper loans or transfers or money switcheroos repeatedly in prior years and then again in 2009 without required approval, without any oversight, and without any prior audit findings or reports about these and other violations of state law as noted in the Comptroller's letter!  Can you say cover-up?

Click here for more background. An e-mail was all it took to find out about the illegalities of all the money switcheroos and how to properly loan money from one fund to another. 

Is anyone going to be held accountable? Will there be a meeting where the tough questions are asked? Are any staff changes going to be made?]

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