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Fulton and Fishkill: Fiscally Stressed Audits, Different Results

ALBANY – The state comptroller has accused a Fishkill town director of misuse of funds after an audit showed $50,000 missing from operations related to the community’s senior center.

“Senior citizens who thought they were paying for activities and events were unwittingly padding this individual’s bank account,” Comptroller Thomas DiNapoli said on Sunday.

“This type of flagrant behavior went undetected because the town lacked basic checks and balances. I urge Fishkill officials to take immediate action to shore up internal financial controls so taxpayer funds are secure and being spent appropriately in the future.”

According to the comptroller’s press release, like many cities and towns, Fishkill offers various services to residents through its senior center, including providing food, coffee, bingo games, and organizing paid day trips and overnight trips. The town’s recreation director is responsible for the center’s financial activities.

The town of Fishkill was approved in November as an applicant for the state’s new financial restructuring board. The city of Fulton was the first municipality approved by the board at the same meeting.

“A top priority of the Office of the State Comptroller is to help local government officials manage government resources efficiently and effectively and, by so doing, provide accountability for tax dollars spent to support government operations.

“The Comptroller oversees the fiscal affairs of local governments statewide, as well as compliance with relevant statutes and observance of good business practice,” the Fishkill audit states.

DiNapoli’s audit revealed the former director did not issue receipts for cash collected at the senior center and did not remit money to the town comptroller or provide reports to the town supervisor.

In addition, the former director opened an unauthorized bank account which allowed her to deposit senior center funds and make undetected and inappropriate withdrawals.

The director subsequently wrote checks from the unauthorized account to herself and her husband for $3,500 more than the actual cost and she and her husband did not pay for the trips.

DiNapoli turned his findings over to the Dutchess County district attorney for further action.

Meanwhile the state comptroller’s office has already been over the city of Fulton’s books in an audit spanning several weeks last summer.

At the conclusion of Fulton’s audit last year the city was deemed to be fiscally stressed, but there were no accusations of wrongdoing.

“The objective of our audit was to review the city’s financial condition,” DiNapoli said in his November report.

“Our audit addressed the following related question: Are city council members and officials effectively managing the city’s financial condition to maintain a reasonable level of fund balance in the general fund?”

Spanning 2010 through May 2013, the findings for Fulton included recognition by the auditors for “realistic budgets,” multiyear financial plans, and for the cost saving measures approved by the common council in an effort to relieve the city’s fiscal stress.

“For example, the city has reduced the number of its employees over the years by not refilling the positions of employees who have retired or separated from the City,” the report states.

“Specifically from March 5, 2010 to March 2013, the city’s number of employees decreased from 159 to 143, or 10 percent. We also found that the city, from fiscal years 2010 to 2012, has reduced costs in areas such as ambulance services, landscaping, rehabilitation, and support to the local library, resulting in total savings of over $800,000 during this period.”

In addition to recognizing the efforts of local government, the comptroller’s office made two recommendations.

“The council should adopt a policy setting forth the reasonable amounts of unexpended surplus funds that the city should maintain.”

And “city officials should reduce reliance on fund balance as a financing source and continue to evaluate and explore ways to cut costs and/or increase revenues.”

These recommendations were a direct reflection of the finding that the city was depleting its reserves without resources to recover reserve balances.

“The council has adopted budgets that have routinely relied on the appropriation of fund balance as a financing source, causing the city to incur planned operating deficits in the general fund,” the report states.

“This has led to a significant reduction in the city’s unexpended surplus

Comptroller DiNapoli's report showed declining fund balances, a condition which requires a correction plan be filed with the state agency.
Comptroller DiNapoli’s report showed declining fund balances, a condition which requires a correction plan be filed with the state agency.

funds from 2010 to 2012. During that period, the unexpended surplus funds remaining at year end declined 84 percent ? from $841,747 in 2010 to $136,068 at the end of 2012 ? leaving the City with little cushion for managing unforeseen events.”

Mayor Ron Woodward responded to the audit Oct. 21, thanking the auditors for their professionalism, and accepting the report on behalf of the administration.

“We are presently in the process of developing a corrective action plan based on the recommendations presented in the draft report,” Woodward’s letter stated. “This formalized plan will be presented in detail by the board no later than 90 days after the final report is released.”

The final report was issued just a few weeks before the city was approved as the first applicant for the Financial Restructuring Board.

It can be viewed online here: City of Fulton Fiscal Stress, November 2013
http://www.osc.state.ny.us/localgov/audits/cities/2013/fulton.pdf

1 Comment

  1. The question is are we going to get the bailout loan or what, talks cheap, money talks. The city is still overstaffed in police, fire and Woodward cronies and the State Comprtroller better tell them the facts of life about consolidation because they will not change unless they are forced to do it.

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