PENNSYLVANIA Audit finds county owes money to state

The county will not pay any penalty -- this time.
By LAURE CIOFFI
VINDICATOR NEW CASTLE BUREAU
NEW CASTLE, Pa. -- Lawrence County commissioners have not yet discussed an audit finding that requires the county to repay the state about $14,000.
Commissioner Dan Vogler said they received a letter this week stating the county must repay the state $12,605.31 it lost when liquid fuel account money was pulled from an investment in 2003.
The letter also requires repayment of $1,297.50 used for snow removal and landscaping by the previous board of county commissioners.
The money comes from the liquid fuels fund -- state aid derived from gasoline taxes that can only be used for road and bridge projects.
The initial investment was pulled in 2003 by Lawrence County Treasurer Gary Felasco to help meet year-end expenses. Felasco has said it was the only account available in December 2003 to pay for year-end expenses.
A letter sent to the county this week from Sherri Zimmerman, director of municipal services from the Pennsylvania Department of Transportation, stated the county will not be penalized for taking the money. The letter stated there was "no history of such loan activity" in the past.
The letter noted, however, that any future inappropriate use of the money may warrant penalties.
Mutual funds
State auditors also were critical of how the county invested the money. More than $1 million was placed in three mutual funds that don't fall under guidelines set in the county code for investments.
The county code permits taxpayer money to be invested only in short-term investments backed by the "full faith and credit of the United States," which could include U.S. Treasury Bonds.
Auditors said the county's liquid fuels allocation was placed in mutual funds that had investments in Federal National Mortgage Corp. and the Federal Home Loan Mortgage Corp. Neither are backed by the federal government.
The mutual funds also had maturity dates longer than one year, beyond the definition of a short-term investment in the county code, auditors said.
cioffi@vindy.com