Information

Park District’s troubles with ‘land acquisition fund’ began during recent budget hearings 

Chagrin Valley Times

August 25, 2022

by Anastasia Nicholas

http://www.chagrinvalleytoday.com/editions/geauga_times_courier/article_96c0533e-245e-11ed-82e8-2ba416c3456d.html

Out of the 32 taxing entities in the county, the Geauga Park District was the only one to not have its budget approved by the Geauga County Budget Commission at its annual tax budget hearing.

The Budget Commission – consisting of the county’s Auditor Chuck Walder, Prosecutor Jim Flaiz, and Treasurer Chris Hitchock – questioned numerous problems with the park district’s budget submission, but most at issue was a $1.3 million reserve fund they argued had been illegally set up.

The park district is a taxing unit, not a taxing authority, and therefore does not have the authority to establish a reserve fund, Mr. Flaiz said.

There were other major problems with how the reserve fund was set up, including that the reserve fund had no specified cap, said Mr. Walder.

“You do not unlawfully create a reserve fund,” Mr. Walder said. “It will go afoul and at some point that money is considered unencumbered carryover. It’s not authorized to be reserved.”

Mr. Walder pointed out there were several resources at the park district’s disposal to learn how to lawfully set up a reserve fund.

“We (the Budget Commission) were sent a request to certify money into the reserve fund,” Mr. Flaiz said. “We communicated to the park board that there were some issues with the reserve fund and we were going to have it reviewed by our legal counsel, and that we had not certified those moneys into the reserve fund. Even though we didn’t certify the moneys into the reserve fund, the park board moved ahead and appropriated those moneys.”

Last year, the Budget Commission reduced the park district’s budget by $1.9 million. Mr. Flaiz rebuked the park board for “lying” to the public about the effects of that budget reduction on park operations.

“We took away $1.9 million which was going to supposedly cripple your operations and your mission,” Mr. Flaiz added, “but you still have enough money in your budget that you submitted now to squirrel away $1.3 million into a land acquisition fund?”

Mr. Walder chimed in to ask, “So, in the year that your taxes were reduced by $1.9 million, you opened a $1.3 million reserve fund with an unknown cap.”

Mr. Hitchcock said he saw “no other resolution to this matter” than to give $1.3 million back to taxpayers in 2023.

Meanwhile, Mr. Flaiz and Mr. Walder favored tabling the matter until the end of the month.

“You can’t sit on $5 or $6 million in your general fund and hoard that from the taxpayers,” Mr. Flaiz said. “That’s their money.”

Mr. Walder explained that, as an auditor, entities who choose to reserve funds must pass a “reasonability” test.

“Your board has been very vocal, and part of that voice was, ‘We’re going to have to close parks because of what (the Budget Commission) did,’” Mr. Walder said. “That tells the taxpayer, ‘We’re hurting for money, so we have to close a facility.’ It puts the fear syndrome into their hearts. At the same time, you want to save some of their money, and you have $1.3 million right now that you can do that with to buy more. There is a reasonableness test, and (the Budget Commission) is not the only one making that test. The public makes it every day.

“You can’t be professing to be the crown jewel if you’re behaving like costume jewelry,” Mr. Walder said. “With costume jewelry, you don’t know what you’re getting until you take it home and tear it apart. If you don’t open yourself up to the public, are you the crown jewel, or are you costume jewelry?”

Mr. Flaiz named other departments that had their budget reduced by the Budget Commission, including the library, the board of mental health, and Job and Family Services.

“None of that turned into this three-ring circus fiasco,” Mr. Flaiz said. “So, it is an us problem, or a you problem? All of them had reductions, but I didn’t see months and months of stories in the paper of, frankly, people making fools out of themselves.”

Mr. Walder questioned a series of discrepancies totaling $56,380 between the budgets submitted last year and this year by the park district.

“The fact that your numbers don’t balance year to year – that’s embarrassing to you and your operation,” Mr. Hitchcock said.

Ms. Pae, the new director of finance for the park district, and park district attorney John Slagter took issue with the Budget Commission waiting until the tax budget hearing to let them know about these problems. Ms. Pae bemoaned that they were “defending numbers they were seeing for the first time.”

These comments gave rise to the realization that Ms. Pae had not reviewed last year’s budget submission before submitting this year’s.

“Because it was so fraught with issues” was Ms. Pae’s explanation as to why.

“It was fixed overnight,” returned Mr. Walder.

Mr. Slagter said that they were promised they would receive the information that was being discussed “a week before” the hearing.

“We let you know months ago that there were problems with the reserve fund,” Mr. Flaiz said.

“Assuming it was unlawfully created, you would agree that it would be wrong for the Budget Commission to certify money into that fund,” Mr. Walder said.

“It would likely be a crime,” Mr. Hitchcock interjected.

“We have not only not certified into that fund, you have already appropriated money and you’ve already expended it,” Mr. Walder went on, “and you’re criticizing us for timeliness.”

In fact, during the section of the meeting reserved for public comment, Protect Geauga Parks’ Secretary Dave Partington said that his organization sent a registered letter to Ms. Pae on July 4 warning her about problems with the land acquisition portion of the budget. The letter also advised Ms. Pae to consult with the Budget Commission

“Large parcels of ecologically significant or key properties often become available for sale unexpectedly or sporadically, and having available funds dedicated for purchasing such parcels is an invaluable asset,” Mr. Partington wrote in that letter to Ms. Pae. “Since the upcoming review by the Budget Commission will be a new experience for you, it may be wise to consult with them prior to the budget review in August to lay a foundation of expectations and circumvent any potential misunderstandings or problems which could potentially derail the budget approval process. Many Geauga County political subdivisions request this kind of vetting process prior to submitting their final budget.”

He finished the letter by stating that acquiring sensitive properties in the county is a goal most residents support.

“I was disappointed to hear her say she received no communication whatsoever before this hearing,” Mr. Partington said. “I know you asked twice.”

In an email sent to local media including this newspaper, Mr. Partington questioned if Ms. Pae had lied in her statement that she had received no suggestions or guidance regarding their budget submission or the reserve fund.

Mr. Flaiz said he would ask the park district about that letter at the continuation of their budget hearing, which was scheduled for 9 a.m. Wednesday, Aug. 31.

“You can’t ask them about it, but we can,” Mr. Flaiz said, alluding to the park district’s seven-year ban on public comment at their board meetings. They are the only park district out of 58 in Ohio with such a ban.

Mr. Walder also pointed to “numerous issues with content,” including sources of money being incorrectly named.

Mr. Walder asked Ms. Pae why she was using Microsoft Excel spreadsheet software to create the budget spreadsheet instead of UAN software.

The Uniform Accounting Network (UAN) “is a financial software package created by the Auditor of State’s office to support the financial management activities of local governments in Ohio,” according to the Auditor of State’s website.

Ms. Pae said they are not statutorily required to generate a UAN budget.

“I understand that,” Mr. Walder said, “but we’ve had conversations for four years that I’ve been here. There’s been a series of errors that were identified as in part due to spreadsheet-based math.”

Mr. Walder gave the example of cells on a spreadsheet not indicating whether they were generated by a formula or manually typing a number.

“So unless I have a staff that goes through and does all of the math, we can’t validate that this is in fact done with good math,” Mr. Walder explained. “Even the board commented last year that spreadsheets are great tools, but they’re not accounting systems. Your move to UAN was welcomed by the entire community because outputs from UAN are mathematically accurate, whereas you can dump anything into a spreadsheet and change anything you want.”

While all of the other budget hearings were complete within their 15-minute allotted time, the park district’s needed a continuance as it was still not finished after nearly two hours.

“We’ve got to get past this nightmare at some point,” Mr. Walder told the park board. “I don’t know if we’re going to if, immediately upon leaving these once-a-year dialogues, you go back, shut out the public, get into your room, badmouth and trash every other elected who’s ever voiced concern against what you’re doing, and then wait 11 months to come back, the whole time warning the new fiscal, ‘You’re in for a nightmare.’ Some people design the system in which they operate.”

Mr. Walder said the park board’s reaction after leaving this meeting would show if more of the same was in store for the future.

“If there’s going to be a course change, we’ve got to reach a compromise and reach a position where we can coexist,” Mr. Walder said. “I personally believe – and this is coming from me as a taxpayer in Geauga – you’re adding a frustration level that is unnecessary by denying the public the ability of voicing their concern. We (the Budget Commission) get constantly pushed by the public. ‘They’re not listening to us because they won’t. You need to do something.’ It all bottles into a one-day event.”

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