State audit of 2011 finances shows longstanding problems IN Youngstown

By David Skolnick


A state audit of the city’s 2011 finances shows Youngstown made the same financial mistakes year after year.

Yet city Finance Director David Bozanich’s assessment of the report is: “It was a good audit. We were pleased with the overall results.”

For the fifth consecutive year, the state audit of the city doesn’t include any findings for financial recovery.

The 2011 audit, released late last month, includes five noncompliance citations and 17 recommendations. That’s an improvement from the 2010 audit with seven noncompliance citations and 17 recommendations.

Nearly all the findings and recommendations in the 2011 audit are identical to problems raised in the last few audits, including 2009 and 2010.

Among them are deficits in various funds.

The audit states Youngstown’s general fund had a $1,353,850 deficit as of Dec. 31, 2011, because the city doesn’t correctly include low-interest loans it gives to businesses in its general fund.

The loans come with an irrevocable letter of credit from banks that give the city the option to obtain the money a couple of days after a request, if needed, Bozanich said.

The item has been in city audits for years with Youngstown adding 0.25 percent interest to the loans about five years ago at the request of the state auditor.

“It’s too valuable a program for small industry for us to stop doing it, particularly because we can get the money back quickly,” Bozanich said.

The audit also again questioned how the city grants money to businesses to help defray the cost of water- and sewer-line work without additional documentation such as invoices showing that the money was spent for those purposes.

The city receives documentation from companies for this work and is satisfied with what it receives, Bozanich said.

“We disagree with” the auditor’s noncompliance finding, he said. “They’re asking for additional bureaucratic involvement. We think it would be anti-competitive with our [business] development programs. We’re already getting adequate documentation.”

The audit also states $11.6 million in outstanding debt on the city-owned Covelli Centre should be in the center’s fund, thus leaving it with a deficit, rather than in the “other government funds” category.

The audit states the city overcharged residents $1.6 million for garbage removal in 2011. It was $1.2 million in 2010. That led to the city’s decision last month to reduce all residential garbage fees by $12 a year.

The audit, like previous ones, calls for the city to create an internal audit committee, to follow its conflict-of-interest policy, get a grant coordinator, and create numerous information technology policies.

The release of the 2010 city audit was delayed by close to a year, coming out in December 2012. At the time of the 2010 release, Ohio Auditor Dave Yost said the delay was because the city changed its computer financial-management system and took “a long time” to provide auditors with needed information about federal money it received and spent.

At the time, Yost said the 2011 audit would be “done soon.” It took a year for it to be done.

Bozanich said he expects the 2012 audit to be finished earlier than the two previous audits.

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