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