The state auditor’s reaction to Akron’s second plan to improve its accounting practices was positive, calling the proposal “workable.”
“The city should continue its efforts to implement the steps outlined in this proposal,” Ohio Auditor Dave Yost wrote in a three-page letter sent to Akron on Thursday.
Yost asked for some additional documentation on portions of Akron’s plan, but didn’t note any significant outstanding issues.
This was a far cry from Yost’s reaction to Akron’s first attempt to address the concerns he’s raised, which called the city’s original plan “a cursory treatment” that lacked “substance and substantial detail.” He warned that Akron could be bumped from fiscal caution to fiscal watch, a more serious designation that involves state oversight, unless he received an improved proposal.
City leaders were pleased by Yost’s latest response.
“It sounds like he’s willing to work with us and that’s the best news,” said Finance Director Diane Miller-Dawson. “We spent of lot of time putting together the last proposal. To have positive feedback is good.”
Miller-Dawson said the city will provide Yost with the additional documentation he’s requesting, some that already is available in information the city is providing in its 2011 state audit now under way.
“We will continue working to try to comply,” she said.
Yost, who released Akron’s 2010 audit Oct. 5, ordered the city to fix poor accounting practices that led to a $104 million fund deficit as of last March. He said Akron has been undertaking capital projects without the revenue to pay for them and faulted the city for having too many funds. He made Akron the first municipality in Ohio to be placed in the state’s new “fiscal caution” designation.
City officials have maintained that Akron has money elsewhere in its budget to cover the negative fund deficits, with more funds having positive than negative balances. The city ended 2011 with a carry-over in its general fund of about $5 million, which was about the same as the year before.
Akron’s second plan, submitted to Yost on Jan. 9, showed that the city had reduced its negative fund balances to about $12 million in 14 funds by the end of 2011 and planned to eliminate the rest of the deficits by the end of 2013. Yost, in his latest response, said he was OK with this timetable.
The city also said it had cut its number of funds from 740 to 121 and issued $146.1 million in debt and other obligations in November and December to reduce the deficit balances, fund ongoing projects and refund prior debt.
The additional information Yost requested in his latest response to the city includes documentation showing how the city reduced its negative fund balances in 2011. He said state auditors will review this consolidation “as part of the city’s 2011 financial audit, with any issues brought back to the city for prompt resolution.”
Yost approved of Akron’s plan to hire a consultant to review its accounting practices, though he suggested speeding up the review and completing it by the end of this year.
Yost asked that the city provide his office with the additional information he requested by Feb. 29. The city also must submit its first quarterly report showing its progress to his office by April 20 for the quarter ending March 31.
Stephanie Warsmith can be reached at 330-996-3705 or swarsmith@thebeaconjournal.com.
