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Youngstown’s use of $305K ‘unallowable,’ state audit finds


Published: Thu, December 20, 2012 @ 12:07 a.m.

By David Skolnick

skolnick@vindy.com

YOUNGSTOWN

A long-delayed state audit of its 2010 finances found the city paid $305,568 from a federal grant to a company that failed to include required documentation, making that payment “unallowable.”

The audit, released today, questioned that expenditure from a federal Energy Efficiency Block Grant. The audit and its concerns have been forwarded to the U.S. Depart-ment of Energy, which oversees that program, for follow-up.

The audit states invoices from that company didn’t include “certified payroll records for work completed. Therefore, all payments made from” this grant are “considered unallowable.”

City Finance Director David Bozanich said, “We’re working to resolve that issue. The contractor did work but didn’t provide payroll records.”

Sean McKinney, the city’s buildings and grounds commissioner, said officials with the company, Valley Electrical Consolidated of Girard, will meet with him today to resolve the issue.

The company, he said, didn’t provide payroll records for two of its managers, and is expected to do so today.

Valley Electrical was the general contractor for a project at the city-owned 20 Federal Place office building to turn the fifth floor into usable space for an expansion of VXI Global Solutions, a call-center business, McKinney said.

This issue didn’t rise to the level of a finding for recovery of money.

The Department of Energy reviewed the grant and found the city in compliance, Bozanich said.

For the fourth-consecutive year, the state audit of the city doesn’t include a finding for recovery.

But including the federal-grant issue, the audit listed a total of seven noncompliance citations and 17 recommendations.

Many of the noncompliance citations and recommendations — including seven related to information-technology shortcomings — have appeared in annual audits going back 10 to 15 years.

“We’re continuing to make progress in terms of improvements,” Bozanich said.

The 2009 audit had four noncompliance citations and 20 recommendations.

The state audit was finished about eight to 10 months later than usual.

Ohio Auditor Dave Yost recently said that a “series of problems in city hall getting their financial information together” caused the delay.

Bozanich agreed with Yost that part of the delay was caused by the city changing its computer financial-management system.

Yost also had said the city took “a long time” to provide his office with needed information about federal money it received and spent in 2010.

Issues with that money were largely connected to one-shot federal stimulus-package funding, which already has been spent, Bozanich said.

The audit states the city failed to create a separate account for its stimulus funding, but doesn’t contend anything illegal occurred.

Other issues in the audit included ending 2010 with deficits in 20 funds, up from 16 in 2009.

“There’s almost no way to balance because of our calendar; the state fiscal year and the federal fiscal year aren’t the same,” Bozanich said. “At given times, there will be surpluses or negatives in those funds.”

The audit states the city overcharged residents for garbage pickup in 2010 by more than $1.2 million and used that extra money to subsidize the general fund.

Also, the audit states the city sold a fire station for $1 million and instead of putting it into a capital projects or bond-retirement fund, where it belongs, it went into the general fund.


Comments

1uselesseater(229 comments)posted 1 year, 9 months ago

"Energy Efficiency Block Grant" and money went to build out space for VXI Global Solutions, a call-center business, a private business???!?!?!

What a continuing mess. More scandal around the VXI deals.

Why is the City even in ownership of 20 Federal Place office building and allowed to be playing landlord? This shouldn't be going on.

The City of Youngstown, like all governments should be forced to divest any ownership and/or control over real estate. If they intend on utilizing land for economic development, then a non profit, non government entity should have control of the properties and deal with the accounting and money.

Suggest removal:

2georgejeanie(807 comments)posted 1 year, 9 months ago

Where in Youngstown is there a fire station worth a million dollars? Start the investigation right there. See who got payed off in that deal, prosecute that culprit, and I'm sure he will gladly rat out more conspirators

Suggest removal:

3johnyoung(241 comments)posted 1 year, 9 months ago

Youngstown has been conducting inter-fund money laundering for many years now. It seems as though the State Auditors are finally awakening from their long nap and citing the city for their improper if not illegal practices.

The fire station deal mentioned in the article was a classic example. A developer was given $1 million dollars from the waste water fund to "make sewer improvements" for a YSU campus project. The developer then turned around and purchased the decrepit fire station at Elm and Madison for you guessed it: the same million dollars! The city then leased the fire station from the developer. In effect, the million dollars was laundered out of the waste water revenue fund and into the general fund in order to balance the general fund budget. and we wonder why our sewer rates are so high.

The current band of city council members and administrators who partake in and approve such activities are unethical, incompetent, and desperately need to be replaced.

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4Ianacek(909 comments)posted 1 year, 9 months ago

The Fire Station deal is interesting . Are we to assume the building rent comes from Property Taxes ?

Why is Shaun McKinney meeting with Valley Electrical Consolidated only now about the payroll reporting issue ? Wouldn't you expect that to have been done long ago , in order to save an embarrasing audit report disclosure ?

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5Petunia(27 comments)posted 1 year, 9 months ago

Bozanich has been a culprit for years. I have been reading the Vindy articles about the annual state audits for quite a few years, and the same issues keep appearing. Basic accounting guidelines require proper internal control. Does anyone in City Hall know what this means? I think some of the problems were basic accounting issues that Bozanich can't or won't get a handle on, such as punching in for shifts, proper accounting of vacation time, keeping track of overtime, and on and on. This man should have been replaced years ago. HELL- the City can hire Tablack. He's held every other finance job in this county and city. Keep George on the payroll just like Sammarone.

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