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Niles financial supervision committee has its first meeting
By Jordan Cohen
NILES
The commission responsible for submitting a recovery plan to end Niles’ fiscal-emergency status will be powerless to do much of anything until the treasurer and auditor books are reconciled.
No one at the first meeting of the Financial Planning and Supervision Commission on Monday would estimate how long that might take.
The seven-member commission was formed after state Auditor Dave Yost declared Niles in fiscal emergency last October because of huge deficits including $2.5 million in the water department. The commission is required under state statute to submit a financial-recovery plan 120 days after its first meeting, meaning the plan is due by May 12.
Auditor representatives said the plan must be sustainable through a five-year economic forecast.
“We’ve got some challenges ahead of us, and until we get this reconciliation, we won’t have any financials to look at,” said Sharon Hanrahan, administrator of the state office of budget and management and commission chairwoman.
Nita Hendryx of the state auditor’s local-government services office said the books may not have been reconciled since 2009. “We’re looking for a good starting point, so we’ll reconcile 2013 and ’14 and try to work our way back,” she said. “Reconciliation is our No. 1 goal.”
Hendryx indicated there should be adequate time after reconciliation for the commission to develop its report.
One reason for the problematic bookkeeping is that the city for many years relied on paperwork instead of computers for both offices. Last year, the city purchased a new system to replace one that failed to work properly during a three-year period.
“I’ve never seen a city the size of Niles that did not have a computerized system for the treasurer and auditor,” Hanrahan said after the meeting.
Another problem is the number of bank accounts. Council President Robert Marino, a commission member, estimated the number at “17 or 18,” making it difficult to reconcile the account with the appropriate budgetary item.
“The treasurer and auditor are elected officials, and they are responsible for their offices,” said Marino who, in a previous Vindicator interview, called the situation “appalling.”
A former clerk in the treasurer’s office, Phyllis Wilson, is charged with embezzling more than $142,000, a theft uncovered by the state’s financial audit. Wilson has been indicted on theft-in- office charges.
City Treasurer Robert Swauger did not attend the Monday session, having asked to be excused because of “problems at work,” Marino said. City Auditor Charles Nader attended the commission meeting but did not comment.
State law requires only plan submission and not approval by the deadline. However, if the commission fails to meet the deadline, city expenditures will be cut by 85 percent as required by statute.
“That could be a problem for meeting bills and payroll,” Hanrahan warned.
She said the recovery plan could include recommendations for an income-tax hike or increased utility bills depending upon the findings after the auditor and treasurer records are reconciled. The plan eventually would have to be approved by city council, and that may not be easy according to Steve Papalas, council finance chairman.
“I think we have to recognize how important this commission is, and I’m not sure that some of city council does,” Papalas said. The councilman did not identify the council members he had in mind.
The commission will have its next session February 18 when it is expected to meet with council.