County leaders respond to audit results
Transparent government: easy to say, difficult to achieve
By Debbie Lowe Staff writer

Indiana State Board of Accounts (SBOA) audit results for 2006 were printed in the Comet two weeks ago. That was the first time in recent history the newspaper has run the results as a news story.

Except for collection errors found at Emergency Medical Services, which resulted in the potential loss of valuable county dollars and the negligence of health department staff to deposit monies collected in a timely fashion, the report centers on accounting and bookkeeping issues between the treasurer's and auditor's offices.

Although not segregated by an additional report, the auditor received criticism within the treasurer's report. The first paragraph of that report states in part..., "The record balances maintained by the auditor were not reconciled to the balance statements provided by the respective depositories."

Department heads and taxpayers alike have asked in the past few months, "What happened? How could the county be out of money all of a sudden?" The answer lies in looking at the past four years' expenses compared to income. As noted in the previous Comet article, the county has consistently received less than was disbursed in the general fund for the past four years. The same is expected for 2007.

The 2006 audit results only paint a partial picture of what happened in the county which led to the current financial crisis. For the past four years, SBOA audit results have pinpointed issues between the auditor and the treasurer - specifically stating that those offices did not balance with each other monthly as dictated by state law. It is suspected the accounts still do not balance, for the fifth year.

Past audit reports indicate the president of the council, Rob Baker, auditor Beth Myers and treasurer Jane Brewington all heard negative comments from SBOA for past years, similar to this year's report. Former commissioners' president Bill Brown heard the comments for three of those years and current president Loren Hylton was present for the 2006 SBOA exit conferences.

Baker and Hylton both reported that SBOA audit results were neither distributed to the other commissioners and council members nor were the issues discussed in open meetings to reach a solution to the problems.

Baker, Hylton, and Myers sat down with the Comet to answer questions and discuss the situation. Council members Ann Brown and Ron Slavens, both members of the council's finance committee established last January to investigate a suspected county finance issue, were also interviewed. Repeated efforts to engage Brewington in an interview were unsuccessful.

According to Brown it was not until late last December that the matter came to the forefront. She said Brewington approached her privately to say she was concerned the county was low on funds. Brown said she believes problems and issues should be discussed openly and in the public eye (transparent government).

Baker, Brown and Slavens said council members did not understand they were on the path to deficit spending until early this past spring.

Baker said yearly SBOA reports were not routinely discussed after they were made available to the public. He said although end-of-the-year-reports are published in the Comet, some of the information contained in them went unnoticed and was not discussed.

Hylton, Baker and Brown reported commissioners and council members were not offered monthly financial reports by the auditor and/or the treasurer for the past four-and-a-half years and neither governing body asked for them. They saw the reports when it was time to develop the next year's budget.

SBOA recommends department heads check monthly audit reports against their own records to find posting errors and discrepancies. According to Tammy White, SBOA Office Supervisor for Counties, if the books in the auditor's and treasurer's offices do not balance as Indiana Code dictates, it is impossible to know how much money is in each account and how much money the county truly has.

County leaders do not agree about the severity of the problem facing the county. When asked if they believed the county was out of money, Baker said "we're low," Slavens gave an emphatic "oh yes," and Myers qualified her answer with, "in county general and we don't have any surplus."

Brown said, "I think we are out of available funds - we have some protected funds, but they are protected for a reason."

Brown and Slavens were present when the SBOA held audit result exit conferences last September. Brown said the meeting could have been an opportunity to ask key questions which would lead them to develop a sound financial plan designed to rectify the current problem.

However, she and Slavens were observers rather than participants in the proceedings. She said she was frustrated because she and Slavens were told they were there to listen, but not participate. She said Baker cautioned her against speaking because he did not "want any confrontation."
 
Brown stated that one issue confronting the council is that they are sometimes left out of critical financial planning matters.
 
For instance, for each of the past four years a transfer of funds into E-911 was approved by the council. Brown said the money is not in the E-911 account balance, as reported by the treasurer. She said presumably the funds were kept in the general fund, which, at the time of the interview, had a deficit balance on the daily cash sheet.
 
The deposit of property tax rebate money received from the state in the last 10 days shows the general fund to have a surplus balance currently.
 
"You can't keep operating with books that are incorrect," Brown said. "Those errors must be corrected to get a true picture of the county financial situation," she added.
 
Brown said the auditor is the chief finance officer of the county, but she does not have powers that supercede the council. She explained that when the Indiana Department of Local Government Finance  (DLGF) instructed approximately $337,000 be removed from the 2007 budget, the auditor made that adjustment without council involvement.
 
Slavens, with a four-year degree in accounting and the newest member of the council, had stronger words to describe how county leaders have ignored the growing problem.
 
"The finance committee as early as March of this year had recommendations about the problems we were seeing," he said. "We were noting a loss of money over the past three to four years. But we weren't allowed by president Baker to bring all of those concerns forward to the full council at one time."
 
Slavens said it was necessary for committee members to disseminate information to the full council in the budget process last summer as topics and departments were discussed. And when the 2006 audit results were made public, Slavens said the council's finance committee provided copies to each of the other council members to ensure they had the up-to-date information.
 
He said he did not understand why the financial arm of county government did not have ready financial information at each meeting.
 
"We shouldn't have to request information," he said. "I was in disbelief that we haven't balanced our checkbook since 2003. I was very shocked this information was not passed on to the full council."
 
Slavens predicted the county would finish the year with a negative balance in the general fund. He said taxpayers should expect to pay more in property taxes in 2008 to provide a remedy for the dilemma.
 
"The big story is yet to come," he said. "The taxpayers will pay for this."
 
"Until the county taxpayer becomes involved, things aren't going to change the way they need to change," Slavens concluded.
 
Myers had a different take on the county financial situation and her role. She said she told council members in 2006 the Department of Local Government Finance recommended they no longer approve additional appropriations because the cash reserve was low.
 
She said she informed council members last spring that a $22,000 additional appropriation would not be approved by the DLGF. She said that was a message to them the county no longer had a cash reserve.
 
"I didn't pass the budget," she said.
 
Myers insisted the special funds accounts are balanced with the treasurer's office. County general is the fund that does not balance by approximately $3,000.
 
Myers, in her fifth year as auditor, said when she was first elected to the office, no one in her office knew how to do the end of the year report, which is published when the books are closed for the year.
[The reports are to be published the following January per state law. However, the last time that deadline was met was in 2002 for 2001.]
 
Myers said after 2003 she began looking for mistakes and adjustments, but she did not know which balance to balance to in the treasurer's office.
 
Myers said one way the county arrived in the current financial crunch was that in 2004 the council appropriated $500,000 to the highway department for payroll. She said the DLGF advised her against that measure. Myers said she reported that to council members either in a meeting or on an individual basis.
 
Myers said she did not know Baker had not shared information given to him with the other council members.
 
Myers said E-911 money figures, allegedly not transferred, were in fact transferred. She explained however the "actual cash balance did not grow." She said the department head was aware of the situation in 2005 or 2006.
 
Myers said an estimated $1.2 million tax settlement will be received and the situation "will be fixed."
 
"It's nothing that we're hiding," she said.
 
Myers said the council's finance committee was helpful to the other council members because they were able to share information. However, Myers said the information would have come forth without the work of the committee.
 
"I had been trying to tell them," she said.
 
Myers also took exception to criticism about not automatically providing financial reports.
 
"I believe if they need information, they need to request it," she said.
 
Myers said although she believes in the open door law, government officials should be allowed to work out problems not in front of the public.
 
Myers predicted the budget submitted in September will not be accepted by the DLGF and "there will be more cuts."
 
SBOA Field Supervisor Rick Cole, Office Supervisor for Counties Tammy White and Field Examiner Lori Rogers met with county leaders Tuesday morning in the Carroll County Courthouse to answer procedural questions.
 
"The State Board of Accounts is out there to answer questions anytime," Cole said. "One strength Carroll County has now is the involvement of officials and government boards who are willing to sit down as a team. It appears they are developing a strategic plan to address the current issue."
 
White said it was not the SBOA recommendation for Carroll County to use the property tax rebate money to bring the general fund balance into the black. She called the county's financial picture "not good." However, White said when county leaders work together as a team, the situation is not hopeless.
 
"They have an attitude of teamwork and are going forward," White added.
 
Rogers said she performed the SBOA audits the past two years and "has seen a change in attitude" in that time.
 
"From our discussions, we feel they've made major strides," Cole concluded.