Monday, September 10, 2018
By ED RUNYAN
The primary reason audits are conducted for cities like Warren is for state auditors to review the methods, accuracy and legality of its financial records.
But many cities also include demographic information, such as the city’s unemployment rate changes over 10 years. They say it allows the reader to “understand the environment within which the city’s financial activities take place.”
The state auditor’s office does not check that information for accuracy, that office says.
The Government Accounting Standards Board recommends that cities also tell who the city’s principal employers are and how that has changed over 10 years.
The Warren audit for 2017, released last month, shows that from 2008 to 2017, the city’s unemployment rate rose from 8.5 percent in 2008 to 12.2 percent in 2010, then fell to 7.2 percent last year.
That corresponds with the ups and downs the city experienced as a result of the U.S. housing crisis, which brought on the nation’s Great Recession around 2008 and subsequent recovery.
The audit also shows Warren’s top employers in 2008 were the hospital now known as the Trumbull Regional Medical Center, Trumbull County government, St. Joseph Warren Hospital, Warren City Schools and Delphi Automotive Systems. It says most of those were still the city’s top employers in 2017 except Delphi, which dropped from fifth to 10th.
But another part of the demographic information — per-capita personal income of Warren residents from 2008 to 2017 — appears to show an unprecedented plunge in the income of city residents — or a mistake.
Turns out it was a mistake.
The misleading data was used in each audit for the past seven years. It suggests that the average personal income of Warren residents dropped from $28,768 per year in 2010 to $16,571 in 2011. If true, it would mean the average Warren resident lost 42.4 percent of his or her income between 2010 and 2011, or an average of $12,197 per resident.
But Warren Auditor Vince Flask, who took office in July 2016, now agrees that the poor economy didn’t decimate Warren residents’ personal income to that extent.
Flask looked into the matter after John Bralich, senior GIS and data manager at Youngstown State University, ran the numbers at the request of The Vindicator and discovered some problems with the audit’s numbers.
Bralich’s work showed that Warren residents’ per-capita income dropped as would be expected during the Great Recession but only a modest amount.
Flask checked with the Cleveland law firm Squire Patton Boggs, which put the demographic information into the audit for the city, and found that the law firm used a different source for the 2011 audit compared to the ones before that. Flask said he thinks that is the reason for the misleading data.
A call to Squire Patton Boggs was not returned.
The data used from 2008 to 2010 came from the Ohio Job & Family Services, Office of Workforce Development, but U.S. Census data was used for 2011 and after, Flask said. The change in data occurred because Job and Family Services data was no longer available after 2010, Flask said.
The chart in the audits over the years didn’t indicate that a change in data sources took place, but Flask said the next audit will either indicate the change in data or use different data.
Bralich said he used U.S. Census data to arrive at his conclusions. It shows that Warren residents’ per-capita income dropped from $17,826 in 2009 to $16,571 in 2010 and $16,442 in 2011, but leveled off after that and gradually rose to $17,680 in 2016, the most recent year available.