TOWER— City officials here may have hoped to have a better financial picture at Monday’s city council meeting, but both interim city clerk-treasurer Ann Lamppa and new budget and finance …
TOWER— City officials here may have hoped to have a better financial picture at Monday’s city council meeting, but both interim city clerk-treasurer Ann Lamppa and new budget and finance committee appointee Dan Schultz told the council it would take more time to pore through a lot of unanswered questions.
“It’s kind of a mess right now, so we have to keep plugging along,” said Schultz. “Expect a much fuller report by the July meeting.”
Mayor Orlyn Kringstad said he had asked Schultz, the former president of Queen City Federal in Virginia, and Diane Meehan, the former president of Frandsen Bank and Trust in Tower, to come in to help Lamppa go through financial records.
Schultz told the council that the cash balances showing on the city’s accounting program are significantly at odds with what bank records show, but it isn’t clear at this point if the discrepancies are the result of poor record-keeping or something more serious. “When the auditors were here they came up with literally dozens and dozens of general journal entries that had to be made so the books would be in order, and I’m not sure those were ever made,” Schultz told the council. He noted that the suspended clerk-treasurer Linda Keith had “made a lot” of general ledger transactions as well, which shifted money in and out of various accounts. “We haven’t been able to follow those,” he said. “Money was obviously transferred from these other accounts to cover checks, but no journal entries were made so it’s hard to go back. I don’t think there’s a discrepancy, it’s just the way the journal entries have flowed so we have to dig into the details and see what those balances are supposed to be.”
Both Schultz and Lamppa said the lack of cash flow is the city’s biggest problem right now and Schultz recommended that the city council receive a cash flow projection every month as Kringstad has called for. But Schultz said providing a clear financial report will still take some time because many accounting entries were not made on a timely basis. “So, it’s difficult to just go in and look at it,” he said. “We have a long way to go before we feel comfortable.”
Schultz said he had begun a review of vouchers and checks and said they seem to match up with his expectation. “I think it will be fine. It’s just a case of going back and tracing entries to make sure they were adequately looked into.”
Kringstad tried to provide some reassurance. “The city isn’t bankrupt,” he said, and predicted the city would be restored to financial health with “prudent financial management.” In addition to thanking Schultz and Meehan for their work, he thanked Nancy Larson who had completed final reports for a number of grants, which enabled the city to start receiving those revenues.
In later discussion, Kringstad reported that city officials would also be going through credit card statements going back five years to make sure that purchases over $500 had been approved by the city council. “We’ve uncovered some cases where that hasn’t occurred,” he said.
“We also need to go through the assets of the city, including office equipment and city vehicles, to be sure they are adequately accounted for,” he said.
The concern for city assets arose last Thursday when the suspended clerk-treasurer was supposed to return a city-owned laptop computer and pick up personal belongings. The city attorney, a Breitung police officer and new council members Mary Shedd and Sheldon Majerle, were at city hall to handle the handover process.
While Keith was given her personal belongings and some personal files from her desk, she reported that she had destroyed the city laptop and it would not be returned. According to Shedd, and confirmed by Majerle, Keith told the city officials that the computer had “died” and that her son had then “shot it,” and she subsequently ran over it with her pickup truck.
“We asked if she had the remains, but she said ‘no,’” reported Shedd, as Keith reportedly claimed she had burned the remains.
At this point, city officials are not certain the age of the laptop, when it purportedly “died” or if the computer was destroyed at all. Keith has made false statements to the city council in the past, as the Timberjay has documented.
“What is disconcerting is that the laptop was not brought back to the council,” said Kringstad. “There is the issue of data, perhaps evidence, that needed to be reviewed, which is no longer available.”
Kringstad said the handling of the laptop raised questions about other “big ticket” purchases and the whereabouts of the items purchased. Tracking the purchases of a number of items has proven difficult, since it appears that invoices were not always maintained in an easily-retrievable manner. Under past clerk-treasurers, invoices were typically bound by month for easy retrieval, but that process ended once Keith assumed the office.
Kringstad said a cursory examination of credit card statements showed a number of laptop computers were purchased in recent years, and he said the city would need to research whether those purchases had been authorized by the council. He also noted that Keith had authorized the purchase of a nearly $500 television set.
Ambulance director Steve Altenburg said the television was purchased for the ambulance quarters. “I replaced it with the exact same size as the previous TV,” he said.
In other business, the council also unanimously approved hiring Virginia attorney Mitch Brunfelt for up to 40 hours at $200 an hour to investigate a long list of allegations against Keith. The council had authorized itself to conduct the investigation last week, but Kringstad said he’d been advised by the city attorney and the League of Minnesota Cities that the city would be better off hiring an outside attorney, even with the additional expense.
The council had previously considered hiring Brunfelt to examine whether a union grievance remedy, approved earlier this year by two people on the city’s grievance committee, could supersede the city’s charter. In the end, the council rejected the grievance remedy on its own.
The council discussed how many of the issues raised needed investigation, with some calling for a more limited investigation while others thought the investigation should be thorough.
“If we’re going to do it, we need to look at everything,” said council member Steve Abrahamson. Acting mayor Rachel Beldo agreed. After further discussion, the council opted to put a limit of 40 hours on the investigation, with the possibility of additional work if needed to address all the issues.
In one of the odder points in the meeting, Altenburg made a presentation to the council using index cards to represent individual months in the year to try to explain that the ambulance service’s accounting is switched from a cash basis to accrual by the auditors each year. Altenburg, who was apparently unfamiliar with the two primary methods of accounting, described the changes made each year by the auditors as “random.”
He said he asked the accountants to change the way they account for ambulance spending to prevent the shifting of revenues and expenses paid in January (but accrued in December).
He said the change resulted in more revenue attributed to 2018 while less will appear in 2019.