As I'm typing this, I've spent the last three to four days of my life digging down deep into the publicly available information about our village's finances. To explain, this means, I've transposed three years of revenue and expense statements BY HAND from the PDFs into a spreadsheet so I can sort, track and do basic math. This is key, because I HIGHLY recommend that you take a calculator to some of the financial documents -- you'll notice that adding up correctly isn't the norm.
Before I dig deep into what the first issue that has been found, I want to explain the structure of our finance department in the Village. In 2017, when CAO Smith was hired, one of the ways the then-President Serwatka got her the much higher salary than the previous Village Manager was to combine the Village Manager position with the Finance Director position.
Let's review what those duties are per our Village Code:
Did you see that the Finance Director is responsible for the preparing of all the financials and the budget presentation? That's key. So, I looked at our most recent budget proposal.
So, the first thing I did to review this was to take a scan down the totals and see that everything simply added up. Strike one! Here's the revenue for the general fund from the budget proposal:
My trusty calculator adds the items in the red box to $1,677,734. Not the $1,644,347 that is listed. Now, you might say that I'm nit-picking here, it's close -- a mere $30,000 difference, Well, can you balance your budget if you had a difference of $30,000. But, one might argue that this is $30,000 in our favor -- but that's only because I'm looking at the revenues -- we will get to the expenditures in a future post, promise. So, maybe she just needs to learn Excel. But how can you trust these numbers? Remember this is a plan of how we will get and spend the village's money -- a plan that every board member voted on to approve. They did this because they trusted that the person hired to present them with accurate information actually did that. Ok, so -- beyond simple math errors what else?
Well, maybe I should look at the Actuals listed -- because after all those should certainly be right -- they are actuals right. Well, knowing there was an math error, I went to the Revenue/Expenditure reports by year because these come directly out of our system. The budget worksheet is actually hand typed (as you'll see, likely not proofread -- but hand typed). I then set up a spreadsheet to compare the end of year actuals by GL (General Ledger) line items to see where and what we spend our money on. Once I got three years worth in (and proofread them), I ran some simple pivots to see what the numbers are. First, let's look at real actuals compared to the numbers in the budget packet:
Yes, you are reading that right -- just looking at the General Fund alone (and there are many other funds to cover), the budget proposal overstated the actuals from the two prior years and UNDERSTATED the expected revenue in the proposed budget. At first, I thought this was just the same adding problem that I found in the first issue -- so I went line by line for 2017-2018 and found that of first 16 lines I checked, 6 of them were wrong, one was $20,000 wrong. Note: I can't be angry with the blue number because that's the actuals from the year end financials and the proposal only had the amended budget (because it was prepared long before year end). Also note, the proposed column is the number from the proposal compared to the actual sum if added correctly. Strike two!
What will Strike Three be? Will it be a building department that essentially doesn't exist (because it's entirely outsourced except for the filing of the permits) being budgeted at a loss? Will it be that over all the departments salaries alone have grown $103,000 and all wages (hourly plus salary) without overtime have grown $64,000 in the past three years? Are we getting our money's worth for such a salary increase when our Finance Director who is also our Budget Officer who is also our CAO can't operate a simple spreadsheet?