Gary audit paints picture of city in fiscal distress
By Carole Carlson firstname.lastname@example.org/648-3154 January 8, 2013 5:00PM
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Updated: February 10, 2013 6:06PM
GARY — Recently released state audits offer a glimpse of the rough financial times the city is enduring.
Transfers were made but not paid back in a timely fashion and the city needs months to pay its bills.
In one case, the audit noted the Sanitary District made two temporary transfers, recorded in December 2011, that totaled $605,000 without approval of the GSD board. The board did not approve the temporary transfers until June 25, 2012.
The audit also disclosed that some funds were overdrawn for four or more years including an emergency shelter fund that had a negative balance.
Some payments to vendors were made more than seven months after the invoice dates.
“We have been slow in repaying because of finances,” said City Controller Celita Green. She blamed part of the city’s fiscal distress on the continuing legal battle with Majestic Star Casino over a disputed $14 million the city says it’s owed and by the city’s low rate of tax collection in the past few years.
One of the city’s obligations is to the Northwest Indiana Regional Development Authority. The audit states the city had an outstanding balance of $6.87 million owed to the RDA as of June 2012.
Also the audit disclosed that city workers were unaware of federal guidelines covering the documentation of grant money spent.
Green said the city has launched some changes to improve its bookkeeping. “We were told in our exit conference is there were a lot of audit findings cleaned up from last year. Since then, we’ve implemented a grant management program and instituted policies and procedures this month.”
The audit also said the city didn’t follow its own public works bid policy when it awarded a contract of $8,265 with Community Development Block Grant funds for renovation work at Pittman Park. The project included a change order of $4,480 which exceeded 50 percent of the project. The city’s policy is to obtain three quotes with the contract going to the “lowest or most responsive vendor.”
In 2011, a miscalculation by staff in the council’s office resulted in City Council members receiving overpayments. The mistake carried forward into the first four pay periods of 2012. The state asked former council members Shirley Stanford and Ragen Hatcher to each reimburse the city $1,148. Last September, Stanford entered into a repayment plan and Hatcher repaid the $1,148 overpayment.
The audit also disclosed issues with the travel policy involving City Council members. The city’s policy allows for members to be reimbursed for car travel or airfare, based on which is less expensive. Lodging expense is not to exceed the lowest single occupancy rate. In two cases, Hatcher was reimbursed for lodging exceeding the lowest single occupancy rate. The difference was $929.
“It is unclear as to why the council members are not abiding by the travel policy. Every effort should be made by the governmental unit to avoid unreasonable or excessive costs.” the auditor wrote.
Other audit findings:
No documentation for daily cash collections for parking at the Adam Benjamin Metro Center.
At the Genesis Center, a petty cash count done Aug. 7, 2012, yielded $5,950, exceeding the $5,000 approved amount.
Two events at the Genesis Center had errors in the calculation of charges with the gratuity fee. In both cases, the lessee was overcharged.
In a September 2012 exit conference with the state, the city said its overdrawn cash balances were due to low tax collections. The city reduced the 2011 general fund ending cash deficit balance to nearly 50 percent lower than 2010.
The city travel policy is being reviewed to ensure it conforms to statutes, and it will be redistributed to all employees.
The city has made all its required quarterly payments to the RDA in 2011 and 2012, reducing its outstanding balance.