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Public Corruption in Chester County, PA

I believe an unlikely mix of alleged drug trafficking related politicos and alleged white nationalist related politicos united to elect the infamous “Bloc of Four” in the abysmal voter turnout election of 2005. During their four year term the drug business was good again and white nationalists used Coatesville as an example on white supremacist websites like “Stormfront”. Strong community organization and support from law enforcement, in particular Chester County District Attorney Joseph W. Carroll has begun to turn our community around. The Chester County drug trafficking that I believe centers on Coatesville continues and I believe we still have public officials in place that profit from the drug sales. But the people here are amazing and continue to work against the odds to make Coatesville a good place to live.

Sunday, October 7, 2012

COATESVILLE UNABLE TO PAY ITS BILLS…..But Why? And can the City Manager explain City Finances?

COATESVILLE UNABLE TO PAY ITS BILLS…..But Why?  And can the City Manager explain City Finances?

Guest Column 

by  Stacy Bjorhus

Former Finance Director at city of coatesville

NBC television news crews hit the streets of Coatesville (10/5/2012).  Video can be seen with the link:  http://www.nbcphiladelphia.com/video/#!/news/local/Coatsville-May-Not-be-Able-to-Pay-Its-Bills/172904491. 

View more videos at: http://nbcphiladelphia.com.
NBC News reported that City Manager will ask City Council Members, to withdraw $2.247 million from the Reserve Trust Fund, and that Council is expected to approve the withdrawal.
The pending withdrawal from the Reserve Trust should be rejected due to City Manager’s failures to comply with the Code Book as it regards Financial Reporting functions:
  • ·        The City’s failure to present current financial reports: 

o   Per the City Code Book (Article VI, §2-609 B.) : Prepare periodic financial reports, at least monthly, and at such other times as the Manager may direct, and at the end of each fiscal year prepare an annual financial report. The monthly reports to the Manager shall be submitted to the Council at its regular meetings and made available to the public. 
o   Financial Reports for July and August have not been remitted to City Council as of Oct 3 2012.

  • ·        The City’s failure to post the City’s 2011 Annual Report submitted to Council on 8/13/2012. 

o   Article VI, §2-610 calls for publication of a summary of the annual audit in the local Coatesville Newspapers.  The Annual Report was approved by Council six weeks ago.  Why isn’t it posted on the City’s web site, or published in summary in the local newspapers?
  • ·        Per the 8/13/12 Approved Minutes, the City’s outside auditor reported to Council that the City ended 2011 with a positive 2011 Year End fund balance of $526,688.[i] 

o    The City’s Auditor cites Year End Fund Balance of $526,688, and the Finance Director cites $450,000 (10/3 PowerPoint Slide #3). 
o   Combined gap projected at  $ 2,697,852
o   Carryover 2012 fund balance     (450,000)
o   Reserve Trust Withdrawal    $ 2,247,852

  • ·         Which figure is correct?  Auditor’s positive Year End variance $526,688 or Finance Director’s positive Year End variance $450,000?

o   If the Auditor is correct then I think the City’s residents need to ask:  Where is the additional $126,688?

  • ·        The Financial Slide from the 10/3 PowerPoint Slide #2[ii] as presented, below, does not note ‘when’ the gap will be realized nor explains how the gap originated.  What is the time frame? What are the facts?
  • ·        Slide #2:

§  * Revenue gap projected at              $545,000
§  * Expenditure gap projected at $2,152,852
§  * Combined gap projected at       $2,697,852

o   Gap is not substantiated with Financial Reports, General Ledger, or Annual Audit data.

  • ·         City’s Finance Director notes the use of the Reserve Trust Funds in Slide 4 of his presentation.  The expenditures noted pertain primarily to extraordinary expenditures and undefined police salaries.  The Use Of Trust Funds do not provide funding for the 14 pending legal claims against the City (noted in Slide 7)[iii], nor the ordinary expenditures that are postulated under ‘austerity’ to still be due by Year End. The current withdrawal does not establish funding for the current payables unfunded as of today.  The only legal claim to be paid from the proposed Trust withdrawal is for Docket # 385-4819 - settled and is currently awaiting payment.)    Expenditures to be paid are shown in the ‘Use of Trust Funds’ below:

 10/3 PowerPoint Slide 4

The current withdrawal from the Reserve Trust does not provide for any of the City’s normal operating expenses in the current time frame or that will be due to be paid by Year End.
Normal Operating Expenditures postulated to be due by Year End:
Personnel – payroll/benefit expenses through Year End $1,000,000
Under budgeted Police MMO (2012 understated Police MMO)[i]  $125,000
Unfunded Pending Legal Claims (due to be paid by Year End)  ?
City owned property Real Estate Tax Payments $100,000
City’s Insurance (Property, Liability) due by Jan 1 2013 $275,000
All other Year End Gen Fund Expenditures (assume austerity):            $700,000

Total                                                                                                                                      $2,200,000 (plus ‘?’)

What about the tally of the Accounts Payable that the Finance Director states are to be presented to Council for approval on Monday night’s Councils Session (10/8/12) that are currently unfunded?  What will they add to the $2,200,000 that’s assumed to become due by Year End?

Normal Operating Revenues postulated to be received from today through Year End:
RE Taxes (Current & Prior Year)                                                                                  $80,000
Earned Income Tax                                                                                                          $500,000
Franchise Fees                                                                                                                      $80,000
Dept Justice Fines                                                                                                               $60,000
Interest Earned on Trust transferred to Gen Fund                                   $130,000
All other Gen Fund Revenues (based on 6/30 Fin Report)                                       $50,000
Total                                                                                                                                    $    $900,000
Expenditures can be expected to overrun revenues (by Year End) by almost $1,300,000 plus the Accounts Payable that are pending as of 10/3/12.  Will the ‘austerity’ Year End shortfall be in the $1,600,000 range?  Where will this money come from?  Will the Trust again be tapped?
Will an estimated $4 million dollars to be withdrawn from the Trust in 2012, if the City can institute ‘austerity’?  This postulated withdrawal will not add to the City’s infrastructure or safety.  It will simply defray City Managers’ failures.  Failures to monitor spending and implement administrative policies that could have reduced the numerous and sizeable legal complaints lodged against the City.
City residents:  demand accountability.  This is your money.  This is your future.  Demand accountability now.  If $4 million is withdrawn from the Reserve Trust in 2012, without substantial benefit to the community, then what will become of the remaining $7 million?  How will City Council protect those funds?

 [1] Minutes of the 8/13/2012 Council Meeting (Presentation # 1):  2011 Financial Statements – Pam Baker, Barbacane Thornton

Ms. Baker announced this is the second year for financial statements due to the integral part of the process done by the independent auditor. The process helped to get the finances back on track.  She announced the DCED audit will be submitted early. This is the best it has been submitted in three years. The revenues for 2011 were $7.6 Million and the expenditures were $9.3 million. After the other financing sources (transfers in and out) the City was positive $526,688 at the end of the year. ……..Mr. Brazzle thanked Mr. Marcarelli for a job well done.

[II] Slide #2

[III] Slide #7

(IV) 2012 Police Pension MMO will be required to be remitted to the Pension Plan for the officers terminated in 2012, and for the excessive Over Time paid to the City’s Full Time Police Officers.  2012 Budget for Police MMO was understated, but will be corrected by Auditor General’s when AG performs the audit.

Powerpoint presentation by Finance Director John Marcarelli at the October 3,2012

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