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State audit of 2011 finances shows longstanding problems IN Youngstown



Published: Wed, January 8, 2014 @ 12:00 a.m.

Report includes no findings for recovery

By David Skolnick

skolnick@vindy.com

YOUNGSTOWN

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.


Comments

1formerdemliberal(182 comments)posted 7 months, 3 weeks ago

Why have an audit if you ignore noncompliance issues and recommendations that will serve to improve financial accountability and relevance of financial reporting?

And yet the financial officer who has repeatedly ignored such findings is carried forward by the McNally administration, apparently for a job well done. Screw the state auditors. Why follow the recommendations of people trained in generally accepted government accounting principles? What the hell do they know?

I guess local Dems have their own set of accounting principles to follow. Just ask our dear departed former county treasurer and Democratic Party leader, Lisa Antonini, as begins her prison sentence for accepting Cafaro bribes.

Once again, same old, same old. Y-town voters can complain, but like lemmings to the sea, they get what they deserve.

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2johnyoung(241 comments)posted 7 months, 3 weeks ago

The facts are that Youngstown's finance director has a long history of robbing Peter to pay Paul in order to make the bloated beast which is Youngstown city government appear solvent, when in reality general fund expenditures greatly outpace revenues; making Youngstown essentially bankrupt. Audit problems began to surface several years ago, however, when Peter's pockets ran dry, and the pockets of Matthew, Mark, and Luke were also raided by the finance director. (Matthew, Mark and Luke being the water, sewer, and sanitation funds).

These funds, which are by law supposed to be dedicated for use on functions for which they are collected, have been "creatively" albeit improperly used to prop up ill-conceived programs such as economic development initiatives and other pet projects and hirings of certain mayors and city council members.

This irresponsible fiscal practice has done nothing to make Youngstown a more viable community, and has resulted in artificially high water, sewer, and sanitation rates for Youngstown residents as well for water rate payers outside of the city limits. Has anyone looked at their water and sewer bills lately?

Youngstown politicians, both mayors and city council members alike, have blindly endorsed this practice for several reasons. First, none of them have been astute enough to actually read and understand the city's annual budget, which the finance director shoves in front of them and they blindly approve. Secondly, artificially propping up the general fund has allowed mayors and city council members to appear effective, when in reality they are merely passengers on a sinking ship. It's a perfect marriage, incompetent politicians look good, and the financed director maintains job security. The only problem is that the taxpayers and rate payers get shafted, especially Youngstown water customers who live in the suburbs.

It will be interesting to see what position newly elected Mayor McNally takes on these fiscal practices.

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3Ianacek(900 comments)posted 7 months, 3 weeks ago

"A good audit" ? It's time for changes . I understand the audit recommendations were ready for release a few months ago , but the Auditor delayed so he could drop them in the lap of the new Mayor .
JohnYoung is right . Not a single Council member has the skill or interest , so its really up to Mayor McNally now to get a new Finance Director urgently & implement changes .

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